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.

Understand the impact of cost behavior on financial reporting and decision-making.

Distinguish between fixed and variable costs and their behavior in relation to changes in production volume.

Comprehend the implications of cost classification on external financial reporting under generally accepted accounting principles (GAAP).

Recognize the role of manufacturing overhead in product costing.

---

Definitions:

Pilot Change

An initial, small-scale implementation of a change or a new project intended to test its feasibility and effectiveness before wider application.

Blue-Collar Workers

Workers who perform manual labor, typically requiring physical work and often in industrial or manufacturing settings.

Innovations

The introduction of new ideas, methods, or products designed to improve effectiveness, efficiency, or competitive advantage.

Knowing-Doing Gap

The discrepancy between what individuals know they should do and what they actually do in practice.