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

question 101

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)A project's regular IRR is found by discounting the cash inflows at the WACC to find the present value (PV), then compounding this PV to find the IRR.
• B)If a project's IRR is greater than the WACC, then its NPV must be negative.
• C)To find a project's IRR, we must solve for the discount rate that causes the PV of the inflows to equal the PV of the project's costs.
• D)To find a project's IRR, we must find a discount rate that is equal to the WACC.

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Definitions:

Parametric Statistical Methods

Statistical methods that assume the data follows a particular distribution, typically used for hypothesis testing or estimating population parameters.

Nonparametric Statistical Methods

Statistical techniques that do not assume a specific distribution for the data, making them suitable for analysis of ordinal data or data that doesn't meet assumptions of parametric tests.

Distributional Assumptions

The set of assumptions regarding the underlying distribution of the data, which are critical in choosing the appropriate statistical test and interpreting its results accurately.

Rank Assigned

A method of assigning ordinal positions to items that are being compared, such as in the sorting of data.