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

question 69

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 regular IRR is found by compounding the initial cost at the WACC to find the terminal value (TV),then discounting the TV at the WACC.
• B) A project's regular IRR is found by compounding the cash inflows at the WACC to find the present value (PV),then discounting the TV to find the IRR.
• C) If a project's IRR is smaller than the WACC,then its NPV will be positive.
• D) A project's IRR is the discount rate that causes the PV of the inflows to equal the project's cost.
• E) If a project's IRR is positive,then its NPV must also be positive.

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Definitions:

Mixed Strategies

In game theory, a strategy that allows for the randomization of choices among different options to achieve a certain outcome.

Pure Strategies

In game theory, a pure strategy is an action chosen by a player where they select a specific move to follow in every possible situation within a game.

Dominant Strategy

A strategy in game theory that yields the best outcome for a player, regardless of what the other players do.

Payoff

The gain or loss that an investor or a player in a game receives as a result of a particular action or decision.