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

question 76

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) The higher the cost of capital used to calculate the NPV, the lower the calculated NPV will be.
• B) If a project's NPV is greater than zero, then its IRR must be less than the cost of capital.
• C) If a project's NPV is greater than zero, then its IRR must be less than zero.
• D) The NPVs of relatively risky projects should be found using relatively low costs of capital.
• E) A project's NPV is generally found by compounding the cash inflows at the cost of capital to find the terminal value (TV), then discounting the TV at the IRR to find its PV.

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Definitions:

Know Anything

The capability or act of understanding, learning, or being aware of information without limitations.

Logically Presented

When information or arguments are arranged and expressed in a clear, orderly, and rational manner.

Sales Negotiation

The process of discussions between the buyer and seller aimed at reaching an agreement on price, terms, or conditions of a sale.