Project a Has an IRR of 15 Percent

question 7

Multiple Choice

Project A has an IRR of 15 percent. Project B has an IRR of 18 percent. Both projects have the same risk. Which of the following statements is most correct?

• A) If the WACC is 10 percent, both projects will have a positive NPV, and the NPV of Project B will exceed the NPV of Project A.
• B) If the WACC is 15 percent, the NPV of Project B will exceed the NPV of Project A.
• C) If the WACC is less than 18 percent, Project B will always have a shorter payback than Project A.
• D) If the WACC is greater than 18 percent, Project B will always have a shorter payback than Project A.
• E) If the WACC increases, the IRR of both projects will decline.

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Definitions:

Second-chance Meetings

Meetings designed to give individuals or teams an opportunity to revisit decisions or actions and possibly rectify past mistakes or oversights.

Wheel Communication Networks

A communication model where all messages pass through a central hub or person before being distributed to others.

Chain Communication Network

A communication system within an organization where messages pass from one member to another in a sequential manner.

Centralized Communication Networks

Link group members through a central control point.