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

question 57

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 it, 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.

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Definitions:

Cramming

A study technique involving intense memorization and learning in a short period, usually right before an examination.

Learning and Memory

The processes by which new information is encoded, stored, and retrieved, essential for adapting and responding to new experiences.

Ebbinghaus

Hermann Ebbinghaus was a German psychologist known for his pioneering work on memory, particularly the discovery of the forgetting curve, which describes the rate at which information is lost over time if there is no attempt to retain it.

Working Memory

A cognitive system responsible for temporarily holding information available for processing, critical for reasoning and the guidance of decision-making and behavior.