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

question 70

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:

Copious Information Exchange

Extensive sharing and transferring of information within an organization or between organizations, facilitating knowledge dissemination and decision-making.

Conflict Stimulation

The deliberate act of inducing conflict with the aim of making existing conflicts more obvious to enhance problem solving and improve group dynamics.

Superordinate Goal

A shared goal that cannot be achieved by any one group alone and overrides other, less important goals, thus promoting cooperation.

Constructive Conflict

A form of disagreement that is managed effectively and leads to productive outcomes, innovation, or problem-solving.