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

question 69

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) A project's regular IRR is found by compounding the initial cost at the WACC to find the terminal value (TV),then discounting the TV at the WACC.
• B) A project's regular IRR is found by compounding the cash inflows at the WACC to find the present value (PV),then discounting the TV to find the IRR.
• C) If a project's IRR is smaller than the WACC,then its NPV will be positive.
• D) A project's IRR is the discount rate that causes the PV of the inflows to equal the project's cost.
• E) If a project's IRR is positive,then its NPV must also be positive.

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Definitions:

F-statistic

A ratio of two variances that is used in analysis of variance (ANOVA) to assess the equality of variances across groups.

k Treatments

In statistics, refers to the application of different conditions or treatments in an experimental design involving multiple experimental groups.

Sum of Squares for Treatments

A statistical calculation that measures the total variation attributable to different treatments or groups in an experiment.

Sample Means

The average value of a set of data samples taken from a larger population.