Which of the Following Statements Is CORRECT

question 70

Multiple Choice

Which of the following statements is CORRECT?

• A) If the cost of capital declines, this lowers a project's NPV.
• B) 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.
• C) 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.
• D) 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.
• E) 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.

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Definitions:

Split-Brain Surgery

A surgical procedure that involves cutting the corpus callosum to treat severe epilepsy, affecting communication between the brain's hemispheres.

Mathematical Processing

The cognitive process that involves the ability to perform mathematical calculations and solve mathematical problems.

Left Hemisphere

The half of the human brain that is typically responsible for language, analytical thought, and logic.

Left Cerebral Hemisphere

The left side of the brain, typically associated with logical reasoning, analytical tasks, language, and mathematics.