Which of the Following Statements Is CORRECT

question 26

Multiple Choice

Which of the following statements is CORRECT?

• A) For a project with normal cash flows,any change in the WACC will change both the NPV and the IRR.
• B) To find the MIRR,we first compound cash flows at the regular IRR to find the TV,and then we discount the TV at the WACC to find the PV.
• C) The NPV and IRR methods both assume that cash flows can be reinvested at the WACC.However,the MIRR method assumes reinvestment at the MIRR itself.
• D) If two projects have the same cost,and if their NPV profiles cross in the upper right quadrant,then the project with the higher IRR probably has more of its cash flows coming in the later years.
• E) If two projects have the same cost,and if their NPV profiles cross in the upper right quadrant,then the project with the lower IRR probably has more of its cash flows coming in the later years.

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Definitions:

Passions High

Situations in which emotions and personal stakes are elevated, often impacting the rationality and objectivity of the individuals involved.

Quick Interventions

Rapid actions or measures taken to address or mitigate an issue, often in emergency or immediate situations.

Loss of Voice

The situation where individuals or groups feel their opinions or concerns are ignored or undervalued in decision-making processes.

Mediation

A process in which a neutral third party helps disputing parties reach a mutually acceptable agreement.