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:

Earth's Surface

The outermost layer of the Earth, consisting of the crust and the upper part of the mantle.

Estuaries

Coastal water bodies where freshwater from rivers meets and mixes with saltwater from the ocean, creating unique and richly biodiverse environments.

Salinity

The measure of the amount of dissolved salts in a given amount of liquid.

Mangrove Swamp

Coastal wetlands found in tropical and subtropical regions, characterized by salt-tolerant trees and bushes adapted to high salt and brackish water conditions.