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

question 96

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 higher the WACC used to calculate the NPV, the lower the calculated NPV will be.
• B)If a project's NPV is greater than zero, then its IRR must be less than the WACC.
• C)If a project's NPV is greater than zero, then its IRR must be less than zero.
• D)The NPVs of relatively risky projects should be found using relatively low WACCs.

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Definitions:

Portion

A part or section of a whole, often expressed as a fraction or percentage.

Complete

To finish or make whole; in mathematics, often refers to making a square in quadratic equations or filling in missing parts of an expression or equation.

Acid Solution

A aqueous solution containing more hydrogen ions (H+) than hydroxide ions (OH-), typically having a pH less than 7.

Quarts

A unit of liquid measure equal to two pints or one fourth of a gallon, used especially in the US.