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

question 99

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) If Project A has a higher IRR than Project B, then Project A must also have a higher NPV.
• B) The IRR calculation implicitly assumes that all cash flows are reinvested at the WACC.
• C) The IRR calculation implicitly assumes that cash flows are withdrawn from the business rather than being reinvested in the business.
• D) If a project has normal cash flows and its IRR exceeds its WACC, then the project's NPV must be positive.
• E) If Project A has a higher IRR than Project B, then Project A must have the lower NPV.

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