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

question 69

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) A project's regular IRR is found by compounding the initial cost at the WACC to find the terminal value (TV),then discounting the TV at the WACC.
• B) A project's regular IRR is found by compounding the cash inflows at the WACC to find the present value (PV),then discounting the TV to find the IRR.
• C) If a project's IRR is smaller than the WACC,then its NPV will be positive.
• D) A project's IRR is the discount rate that causes the PV of the inflows to equal the project's cost.
• E) If a project's IRR is positive,then its NPV must also be positive.

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Definitions:

Dreamer

An individual prone to conceptual or fantastical thinking, often with a vivid imagination that transcends the common realities of life.

Rosalind Cartwright

A clinical psychologist known for her research on dreams and their connection to waking life.

Activation-Synthesis Model

A theory suggesting that dreams are caused by the brain trying to make sense of random neural activity during REM sleep.

Neural Firing

The process by which a neuron sends an electrical signal across a synapse to another neuron.