Which of the Following Statements Is CORRECT

question 82

Multiple Choice

Which of the following statements is CORRECT?

• A) For a project to have more than one IRR,then both IRRs must be greater than the WACC.
• B) If two projects are mutually exclusive,then they are likely to have multiple IRRs.
• C) If a project is independent,then it cannot have multiple IRRs.
• D) Multiple IRRs can occur only if the signs of the cash flows change more than once.
• E) If a project has two IRRs,then the smaller one is the one that is most relevant,and it should be accepted and relied upon.

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Definitions:

Break-Even Point

The level of sales at which total revenues equal total costs, resulting in zero profit.

Break-Even

The moment when total expenditures coincide with total income, ensuring there is no financial loss or gain.

Monthly Dollar Sales

The total revenue generated from sales of goods or services within a specific month, expressed in dollars.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.