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

question 95

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 lower the cost of capital used to calculate a project's NPV, the lower the calculated NPV will be.
• B) If a project's NPV is less 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 NPV of a relatively low-risk project should be found using a relatively high cost of capital.
• E) A project's NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the cost of capital.

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Definitions:

Sensitization

An increase in behavioral response after exposure to a stimulus, often leading to heightened responsiveness to other stimuli.

Sensitization Response

Sensitization response is a process where repeated exposure to a stimulus results in the progressive amplification of a response.

Electrical Stimulation

A therapeutic or research technique that involves applying electrical current to stimulate nerves, muscles, or brain areas.

Luigi Galvani

An 18th-century Italian physician and scientist known for his discovery of bioelectricity, especially in the context of muscle movement.