Which of the Following Statements Is CORRECT? Assume That All

question 71

Multiple Choice

Which of the following statements is CORRECT? Assume that all projects being considered have normal cash flows and are equally risky.

• A) If a project's IRR is equal to its WACC, then under all reasonable conditions, the project's IRR must be negative.
• B) If a project's IRR is equal to its WACC, then under all reasonable conditions the project's NPV must be zero.
• C) There is no necessary relationship between a project's IRR, its WACC, and its NPV.
• D) When evaluating mutually exclusive projects, those projects with relatively long lives will tend to have relatively high NPVs when the cost of capital is relatively high.
• E) If a project's IRR is equal to its WACC, then, under all reasonable conditions, the project's NPV must be negative.

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Definitions:

Valued Positively

Referenced to attributes, behaviors, or concepts that are generally appreciated and seen as advantageous in a society or culture.

Across Cultures

Refers to phenomena or interactions that span different cultural backgrounds or settings.

Norms for Expressing

Socially accepted rules or standards guiding how emotions and feelings should be shown or communicated in different contexts.

Cognitive Component

The aspect of attitude that encompasses beliefs and thoughts about an object, situation, or individual.