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

question 106

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) A project's regular IRR is found by discounting the cash inflows at the cost of capital to find the present value (PV), then compounding this PV to find the IRR.
• B) If a project's IRR is greater than the WACC, then its NPV must be negative.
• C) To find a project's IRR, we must solve for the discount rate that causes the PV of the inflows to equal the PV of the project's costs.
• D) To find a project's IRR, we must find a discount rate that is equal to the cost of capital.
• E) A project's regular IRR is found by compounding the cash inflows at the cost of capital to find the terminal value (TV), then discounting this TV at the cost of capital.

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Definitions:

Korean War

A struggle that occurred from 1950 to 1953, involving North Korea, backed by China and the Soviet Union, versus South Korea, which had the support of the United Nations, mainly the United States.

American Revolution

The political and military conflict between the thirteen American colonies and Great Britain from 1775 to 1783, resulting in the independence of the colonies and the formation of the United States.

World War II

A global conflict that lasted from 1939 to 1945, involving most of the world's nations, including all of the great powers, eventually forming two opposing military alliances: the Allies and the Axis. It was the deadliest conflict in human history.