Which of the Following Statements Is CORRECT

question 53

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 only occur 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:

International Trade

The exchange of goods and services between countries, driven by the differences in costs of production, resource distribution, and various other factors.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors.

Absolute Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Specialize

To focus on a particular area of study, work, or production, becoming an expert or highly skilled in that area.