Which of the Following Statements Is CORRECT

question 53

Multiple Choice

Which of the following statements is CORRECT?

• A) If the cost of capital declines, this lowers a project's NPV.
• B) The NPV method is regarded by most academics as being the best indicator of a project's profitability; hence, most academics recommend that firms use only this one method.
• C) A project's NPV depends on the total amount of cash flows the project produces, but because the cash flows are discounted at the cost of capital, it does not matter if the cash flows occur early or late in the project's life.
• D) The NPV and IRR methods may give different recommendations regarding which of two mutually exclusive projects should be accepted, but they always give the same recommendation regarding the acceptability of a normal, independent project.
• E) The NPV method was once the favorite of academics and business executives, but today most authorities regard the MIRR as being the best indicator of a project's profitability.

---

Definitions:

Liberals

Individuals or groups who advocate for freedom of the individual, democratic principles, and often support progressive reforms in society.

Conservatives

Individuals or groups that hold traditional values and are resistant to change, advocating for the preservation of established institutions.

Social Psychologists

Professionals who analyze the impact of real, perceived, or suggested presence of other people on a person's mental processes, emotions, and actions.

Win-win Propositions

Solutions or agreements designed to bring positive outcomes for all parties involved, often sought in negotiations to ensure mutual satisfaction.