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:

Internal Control

Procedures and processes implemented by a company to safeguard its assets, ensure financial reporting accuracy, and promote operational efficiency.

Assets

Economic resources controlled or owned by a person or company, expected to provide future benefits.

Misappropriation

The intentional, illegal use of another's funds or property for one's personal use.

Dishonest Employees

Workers who engage in fraudulent or unethical behavior, potentially harming their employer financially or reputationally.