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:

Consistency

The quality of achieving a level of performance or appearance that does not vary greatly in quality over time.

Kodak Case

Refers to the study of Kodak's downfall as it failed to adapt to digital photography, illustrating the importance of innovation and adaptability in maintaining brand relevance.

Poseur

An individual who adopts a particular style or identity, often inauthentically, to impress others or fit into a specific cultural group.

Nascent

An early stage of development or emergence, often used to describe markets, technologies, or industries that are just beginning to form.