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:

Cognitive Theory

A psychological paradigm that emphasizes mental processes such as thinking, memory, and problem-solving as central to understanding behavior.

Cognitive Distortion

Irrational thought patterns that contribute to negative emotions, behaviors, or attitudes, often recognized in cognitive-behavioral therapy.

Dysfunctional Thinking

Patterns of thought that are irrational, negative, and may lead to emotional distress or behavioral problems.

Negative Experiences

Negative experiences are events or situations that have a harmful or unpleasant impact on an individual's psychological or physical well-being.