Which of the Following Statements Is CORRECT

question 56

Multiple Choice

Which of the following statements is CORRECT?

• A) The NPV method was once the favorite of academics and business executives,but today most authorities regard the MIRR as being the best indicator of a project's profitability.
• B) If the cost of capital declines,this lowers a project's NPV.
• C) The NPV method is regarded by most academics as being the best indicator of a project's profitability,hence most academics recommend that firms use only this one method and disregard other methods.
• D) A project's NPV depends on the total amount of cash flows the project produces,but because the cash flows are discounted at the WACC,it does not matter if the cash flows occur early or late in the project's life.
• E) The NPV and IRR methods may give different recommendations regarding which of two mutually exclusive projects should be accepted,but they always give the same recommendation regarding the acceptability of a normal,independent project.

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Definitions:

Paradoxical Intervention

A therapeutic technique in which a therapist prescribes or suggests the continuation of the behavior symptomatic of the client's issue, often leading to change through resistance to the suggestion.

Social-learning Theory

A theory which posits that people learn new behaviors through observing and imitating others, alongside direct reinforcement.

Cognitive Dissonance Theory

A theory that explains the feelings of discomfort that result from holding two conflicting beliefs.

Freud's Theory

A set of psychoanalytic theories developed by Sigmund Freud that emphasize unconscious processes, sexual and aggressive instincts, and early childhood experiences.