Both theoretical and numerical results on the relationships between the magnitude of the interphase drag coefficients, the mesh size, and the stability of the semi-implicit method used in RELAP5 are presented. It is shown that the numerical solutions are both stable and convergent on meshes with a characteristic ratio (ratio of mesh size-to-hydraulic diameter) that is not too small, that the code is capable of simulating physical instabilities on coarse meshes, and that unphysical instabilities will occur only at small mesh size even for problems that admit physical instabilities. Good transition from pre-critical heat flux (CHF) to post-CHF, however, is necessary to improve the accuracy of certain calculations.