Which of the Following Statements Is CORRECT

question 36

Multiple Choice

Which of the following statements is CORRECT?

• A) if the cost of capital declines, this lowers a project's npv.
• B) the npv method is regarded by most academics as being the best indicator of a project's profitability; hence, most academics recommend that firms use only this one method.
• C) a project's npv depends on the total amount of cash flows the project produces, but because the cash flows are discounted at the cost of capital, it does not matter if the cash flows occur early or late in the project's life.
• D) the npv and irr methods may give different recommendations regarding which of two mutually exclusive projects should be accepted, but they always give the same recommendation regarding the acceptability of a normal, independent project.
• E) the npv method was once the favorite of academics and business executives, but today most authorities regard the mirr as being the best indicator of a project's profitability.

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Definitions:

New Jersey Plan

A proposal at the Constitutional Convention favoring a unicameral legislature with equal representation for each state, regardless of population size.

Virginia Plan

A proposal by Virginia delegates for a bicameral legislative branch during the drafting of the United States Constitution in 1787.

Declaration of Independence

A foundational document adopted on July 4, 1776, in which the thirteen American colonies declared their independence from British rule.

Revolutionary War

The Revolutionary War, also known as the American Revolution, was the conflict between thirteen American colonies and British rule that led to the formation of the United States of America after the colonies won their independence.