Which of the Following Statements Is CORRECT? Assume That the Project

question 95

Multiple Choice

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

• A) The lower the cost of capital used to calculate a project's NPV, the lower the calculated NPV will be.
• B) If a project's NPV is less than zero, then its IRR must be less than the cost of capital.
• C) If a project's NPV is greater than zero, then its IRR must be less than zero.
• D) The NPV of a relatively low-risk project should be found using a relatively high cost of capital.
• E) A project's NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the cost of capital.

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Definitions:

Accessory Organ

Accessory organs refer to organs that assist the functioning of the main organs in various systems, such as the pancreas and liver in the digestive system.

Alimentary Canal

A series of connected organs through which food passes, where it is digested, nutrients are absorbed, and waste is expelled.

Pancreatic Juice

A liquid secreted by the pancreas that contains digestive enzymes and bicarbonate to aid in digestion.

Bicarbonate Ions

are negatively charged ions that act as a buffer in blood and help maintain the body's pH balance.