Which of the Following Statements Is CORRECT? Assume That All

question 16

Multiple Choice

Which of the following statements is CORRECT? Assume that all projects being considered have normal cash flows and are equally risky.

• A) If a project's IRR is equal to its WACC, then under all reasonable conditions, the project's IRR must be negative.
• B) If a project's IRR is equal to its WACC, then under all reasonable conditions the project's NPV must be zero.
• C) There is no necessary relationship between a project's IRR, its WACC, and its NPV.
• D) When evaluating mutually exclusive projects, those projects with relatively long lives will tend to have relatively high NPVs when the cost of capital is relatively high.
• E) If a project's IRR is equal to its WACC, then, under all reasonable conditions, the project's NPV must be negative.

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Definitions:

Transfer System

Transfer System typically refers to mechanisms or processes for efficiently moving or reallocating resources, information, or individuals from one location, department, or system to another.

Elwood Holton

An influential figure in the field of adult education, known for contributions to theories regarding the transfer of learning and human resource development.

Implications

The possible effects or consequences that may result from a particular action or decision.

Transfer of Training

The successful transfer of abilities, understanding, or actions acquired in one situation to a different situation.