Which Statement About a Project's IRR Is Correct? Assume That

question 12

Multiple Choice

Which statement about a project's IRR 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 NPV must be negative.
• B)If a project's IRR is equal to its WACC, then, under all reasonable conditions, the project's IRR must be negative.
• C)If a project's IRR is equal to its WACC, then, under all reasonable conditions, the project's NPV must be zero.
• D)There is no necessary relationship between a project's IRR, its WACC, and its NPV.

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Definitions:

Arousal

The physiological and psychological state of being awoken or stimulated to action, often associated with increased activity in the sympathetic nervous system.

Difficult Tasks

Activities or problems that require significant effort, skill, or intellectual capacity to be completed successfully.

Confidence

The feeling or belief that one can rely on someone or something; firm trust.

Social Facilitation

The tendency for people to perform differently when in the presence of others than when alone, typically improving on simple or well-rehearsed tasks.