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

question 71

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 NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV),then discounting the TV at the WACC.
• B) The lower the WACC used to calculate it,the lower the calculated NPV will be.
• C) If a project's NPV is less than zero,then its IRR must be less than the WACC.
• D) If a project's NPV is greater than zero,then its IRR must be less than zero.
• E) The NPV of a relatively low-risk project should be found using a relatively high WACC.

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Definitions:

Impression Formation

The psychological process through which we form a mental image or judgment about another person based on available information and cues.

Social Psychology

The scientific study of how individuals think, influence, and relate to one another within a societal context.

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Cognitive frameworks or structures that help individuals organize and interpret information, based on prior experience or knowledge.

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To convert information or an idea into a particular form, often for communication or processing.