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:

Psychosocial Development

A theory proposed by Erik Erikson that describes how individuals evolve through and navigate various social and emotional stages throughout their lives.

Sense Of Industry

A stage in psychological development where an individual develops a sense of competence and achievement, usually occurring during childhood.

Praise And Support

Acts of expressing approval or admiration combined with assistance and encouragement.

Psychosocial Crises

Conflicts between personal impulses and the social world, which Erik Erikson proposed occur throughout one's life in eight distinct stages.