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

question 27

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

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Definitions:

Unconditional Positive Regard

A concept within the humanistic approach to psychology, emphasizing complete acceptance and support of a person irrespective of their behavior or feelings.

Total Acceptance

Unconditional acknowledgment and embracement of an individual or situation without attempting to change it.

Self-actualization

The achievement or satisfaction of an individual's abilities and potentials, seen as a universal motivation or necessity.

Abraham Maslow

An American psychologist renowned for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization.