Which of the Following Statements Is CORRECT

question 56

Multiple Choice

Which of the following statements is CORRECT?

• A) The NPV method was once the favorite of academics and business executives,but today most authorities regard the MIRR as being the best indicator of a project's profitability.
• B) If the cost of capital declines,this lowers a project's NPV.
• C) The NPV method is regarded by most academics as being the best indicator of a project's profitability,hence most academics recommend that firms use only this one method and disregard other methods.
• D) A project's NPV depends on the total amount of cash flows the project produces,but because the cash flows are discounted at the WACC,it does not matter if the cash flows occur early or late in the project's life.
• E) The NPV and IRR methods may give different recommendations regarding which of two mutually exclusive projects should be accepted,but they always give the same recommendation regarding the acceptability of a normal,independent project.

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Definitions:

Red Circle Rates

Pay rates that are higher than the typical range for a position or task, often protected by a grandfather clause.

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The highest value within a designated range, often used in contexts such as salary scales where it represents the top salary available for a particular position.

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Research studies distributed publicly that report on the common wages and salaries across various industries or positions.

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The degree to which two systems, devices, or substances are able to work or exist together without conflict or problems.