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

question 66

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) The higher the WACC used to calculate the NPV, the lower the calculated NPV will be.
• B) If a project's NPV is greater than zero, then its IRR must be less than the WACC.
• C) If a project's NPV is greater than zero, then its IRR must be less than zero.
• D) The NPVs of relatively risky projects should be found using relatively low WACCs.
• E) A project's NPV is generally found by compounding the cash inflows at the WACC to find the terminal value (TV), then discounting the TV at the IRR to find its PV.

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Definitions:

Peripheral Nervous System

The part of the nervous system that consists of the nerves and ganglia outside of the brain and spinal cord.

Conditioned Response

A conditioned response is a learned reaction or response to a previously neutral stimulus that has become significant through association.

Unconditioned Response

An automatic, natural response to a stimulus that does not require previous conditioning or learning.

Trial-And-Error

A problem-solving method involving repeated, varied attempts which are continued until success, or until the agent stops trying.