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

question 69

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) A project's regular IRR is found by compounding the initial cost at the WACC to find the terminal value (TV),then discounting the TV at the WACC.
• B) A project's regular IRR is found by compounding the cash inflows at the WACC to find the present value (PV),then discounting the TV to find the IRR.
• C) If a project's IRR is smaller than the WACC,then its NPV will be positive.
• D) A project's IRR is the discount rate that causes the PV of the inflows to equal the project's cost.
• E) If a project's IRR is positive,then its NPV must also be positive.

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Definitions:

Commitment

The state or quality of being dedicated to a cause, activity, or relationship, often demonstrated through perseverance and loyalty.

Costs

Expenses or expenditures required for something; can refer to financial, emotional, or other forms of costs.

Rewards

Benefits, incentives, or compensations received as a result of one's actions or behaviors.

Labeling Theory

The view that reactions of, and characterizations by, others are an essential element in deviance.