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

question 33

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

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Definitions:

Goal-path Clarity

signifies the clear understanding of the objectives to be achieved and the specific methods or steps required to reach those goals.

Cohesive

The degree to which members of a group are attracted to, and motivated to remain part of, that group, often leading to increased solidarity and group effectiveness.

Groupthink

A psychological phenomenon occurring within a group of people, where the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Shared Information Bias

A tendency in group decision-making processes to disproportionately discuss information that all members are already familiar with, rather than considering new or unknown information.