Which of the Following Statements Is CORRECT

question 33

Multiple Choice

Which of the following statements is CORRECT?

• A) The NPV method was once the favorite of academics and business executives, but today most authorities regard the MIRR as being the best indicator of a project's profitability.
• B) If the cost of capital declines, this lowers a project's NPV.
• C) The NPV method is regarded by most academics as being the best indicator of a project's profitability; hence, most academics recommend that firms use only this one method.
• D) A project's NPV depends on the total amount of cash flows the project produces, but because the cash flows are discounted at the WACC, it does not matter if the cash flows occur early or late in the project's life.
• E) The NPV and IRR methods may give different recommendations regarding which of two mutually exclusive projects should be accepted, but they always give the same recommendation regarding the acceptability of a normal, independent project.

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Definitions:

Hans Selye

A pioneering endocrinologist known for his research on the effects of stress on the human body and for defining the "General Adaptation Syndrome."

Parasympathetic Nervous System

Part of the autonomic nervous system that conserves energy by slowing the heart rate, increasing intestinal and gland activity, and relaxing sphincter muscles.

Stress

The body's response to any demand or challenge, which can be physical, mental, or emotional, and can have both positive and negative effects.

PTSD

Post-Traumatic Stress Disorder; a mental health condition triggered by experiencing or witnessing a terrifying event, characterized by flashbacks, nightmares, and severe anxiety.