An Increase in the Firm's WACC Will Decrease Projects' NPVs,which

question 3

True/False

An increase in the firm's WACC will decrease projects' NPVs,which could change the accept/reject decision for any potential project.However,such a change would have no impact on projects' IRRs.Therefore,the accept/reject decision under the IRR method is independent of the cost of capital.

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Definitions:

Customary Pricing

Setting prices based on what is traditionally expected or accepted within a market or by customers.

Target Pricing

A pricing strategy where the selling price of a product is determined based on the anticipated consumer demand and desired profit margin, often before the product is launched.

Unit Variable Cost

The cost associated with producing one additional unit of a product, which includes costs that vary directly with the production volume, such as raw materials and labor.

Fixed Cost

Expenses that do not change with the level of goods or services produced by a business, such as rent or salaries.