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:

Fiduciary Relationship

A legal and ethical relationship of trust between two or more parties, typically involving a caretaker and a beneficiary.

Expert

Refers to someone who is both experienced and learned in a given subject matter area or professional practice field.

Client

An individual or organization that engages the professional services or advice of another.

Best Judgment

The highest quality assessment or decision made based on knowledge and experience.