Which of the Following Statements Is CORRECT

question 29

Multiple Choice

Which of the following statements is CORRECT?

• A) If Project A's IRR exceeds Project B's, then A must have the higher NPV.
• B) A project's MIRR can never exceed its IRR.
• C) If a project with normal cash flows has an IRR less than the cost of capital, the project must have a positive NPV.
• D) If the NPV is negative, the IRR must also be negative.
• E) If a project with normal cash flows has an IRR greater than the cost of capital, the project must also have a positive NPV.

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Definitions:

Units-Of-Production Method

An accounting method of depreciation that allocates cost based on the actual usage or production levels of the asset.

Depreciation Expense

An accounting method used to allocate the cost of a tangible asset over its useful life.

Machine Hours

A measure of the operating time of a machine, used in costing and budgeting to allocate expenses based on usage.

Units-Of-Production

A depreciation method that allocates the cost of an asset over its useful life based on the number of units it produces.