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

question 1

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 lower the WACC used to calculate a project's NPV, the lower the calculated NPV will be.
• B) If a project's NPV is less 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 NPV of a relatively low-risk project should be found using a relatively high WACC.
• E) A project's NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the WACC.

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