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

question 87

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 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.
• B) The higher the WACC used to calculate the NPV,the lower the calculated NPV will be.
• C) If a project's NPV is greater than zero,then its IRR must be less than the WACC.
• D) If a project's NPV is greater than zero,then its IRR must be less than zero.
• E) The NPVs of relatively risky projects should be found using relatively low WACCs.

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Definitions:

Agoraphobia

An anxiety disorder characterized by an intense fear of being in situations where escape might be difficult or where help wouldn't be available if things go wrong.

Obsessive-Compulsive Disorder

A mental disorder characterized by intrusive thoughts that produce anxiety (obsessions) and repetitive behaviors meant to reduce that anxiety (compulsions).

Phobic Disorder

A type of anxiety disorder characterized by an intense and irrational fear of specific objects, activities, or situations that poses little to no actual danger.

Bipolar Disorder

A mental health condition characterized by significant mood swings including manic highs and depressive lows.