Which of the Following Statements Is Correct

question 34

Multiple Choice

Which of the following statements is correct?

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

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Definitions:

Bond Prices

The market cost of bonds, which can fluctuate based on interest rate movements, credit quality, and other factors.

Retractable Bonds

Bonds that provide the holder the option to redeem them at a predetermined price before maturity, potentially at par value or a slight premium.

Interest Rates

The fee, shown as a percentage of the total amount loaned, that a lender imposes on a borrower for the right to use their funds.

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns, encompassing methods such as buying stocks, bonds, or real estate.