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

question 91

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) If Project A has a higher IRR than Project B, then Project A must also have a higher NPV.
• B) The IRR calculation implicitly assumes that all cash flows are reinvested at the cost of capital.
• C) The IRR calculation implicitly assumes that cash flows are withdrawn from the business rather than being reinvested in the business.
• D) If a project has normal cash flows and its IRR exceeds its cost of capital, then the project's NPV must be positive.
• E) If Project A has a higher IRR than Project B, then Project A must have the lower NPV.

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Definitions:

Relationship

A connection, association, or interaction between two or more entities, persons, or concepts.

Correlation Coefficients

Statistical measures that describe the type and strength of the relationship between two variables.

Relationship

A link or relationship that exists among two or more people, organizations, or things.

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Footwear made from rubber to provide waterproof protection and support in wet or muddy conditions.