Assume a Project Has Normal Cash Flows

question 48

Multiple Choice

Assume a project has normal cash flows.All else being equal,which of the following statements is correct?

• A)The project's IRR increases as the WACC declines.
• B)The project's NPV increases as the WACC declines.
• C)The project's MIRR is unaffected by changes in the WACC.
• D)The project's regular payback increases as the WACC declines.

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Definitions:

Present Value

The worth in present terms of a lump sum or cash flows anticipated in the future, using a predetermined rate of return for the calculation.

Per Year

A time frame reference indicating an annual basis.

Savings Account

A savings account in a bank or financial institution that guarantees the safety of the deposited capital while offering a low interest rate.

Interest Rate

The cost incurred by a borrower from a lender for utilizing assets, shown as a percentage of the principal sum.