Consider Projects S and L

question 50

Multiple Choice

Consider projects S and L.Both have normal cash flows, and the projects have the same risk, hence both are evaluated with the same WACC, 10%.However, S has a higher IRR than L.Which of the following statements is CORRECT?

• A) If Project S has a positive NPV, Project L must also have a positive NPV.
• B) If the WACC falls, each project's IRR will increase.
• C) If the WACC increases, each project's IRR will decrease.
• D) If Projects S and L have the same NPV at the current WACC, 10%, then Project L, the one with the lower IRR, would have a higher NPV if the WACC used to evaluate the projects declined.
• E) Project S must have a higher NPV than Project L.

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Definitions:

Bulimia Nervosa

An eating disorder characterized by binge eating and subsequent purging, usually by induced vomiting and/or use of laxatives.

High School Girls

Female students attending high school, typically aged between 14 and 18 years.

Bulimia Nervosa

An eating disorder characterized by cycles of binge eating followed by purging to prevent weight gain, involving behaviors such as vomiting, fasting, or excessive exercise.

Laxatives

Substances taken to stimulate bowel movements, often used to treat constipation.