Westchester Corp

question 31

Multiple Choice

Westchester Corp.is considering two equally risky,mutually exclusive projects,both of which have normal cash flows.Project A has an IRR of 11%,while Project B's IRR is 14%.When the WACC is 8%,the projects have the same NPV.Given this information,which of the following statements is CORRECT?

• A) If the WACC is 13%,Project A's NPV will be higher than Project B's.
• B) If the WACC is 9%,Project A's NPV will be higher than Project B's.
• C) If the WACC is 6%,Project B's NPV will be higher than Project A's.
• D) If the WACC is greater than 14%,Project A's IRR will exceed Project B's.
• E) If the WACC is 9%,Project B's NPV will be higher than Project A's.

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Definitions:

Income Received

The total earnings obtained by individuals or entities, typically through employment, investments, or other sources, during a specified period.

Lower Two Quintiles

Refers to the bottom 40% of a population when it is divided into five equal groups according to income levels.

Income Earned

The total amount of money received by an individual or a business in exchange for labor or the provision of services during a certain period.

Black Children

A term referring to children of African or African American descent.