Which of the Following Statements Is Correct

question 27

Multiple Choice

Which of the following statements is correct?

• A)For a project with normal cash flows, any change in the WACC will change both the NPV and the IRR.
• B)To find the MIRR, we first compound cash flows at the regular IRR to find the TV, and then we discount the TV at the WACC to find the PV.
• C)The NPV and IRR methods both assume cash flows can be reinvested at the WACC. However, the MIRR method assumes reinvestment at the MIRR itself.
• D)If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the lower IRR probably has more of its cash flows coming in the later years.

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Definitions:

Battle of Saratoga

A pivotal series of engagements in 1777 during the American Revolutionary War, which resulted in a decisive victory for the American forces and significantly boosted their morale.

Morristown, New Jersey

A historic city in the United States known for its role in the American Revolutionary War and as a winter encampment site for George Washington and the Continental Army.

Redcoats

A historical term for British soldiers, derived from the distinctive red uniforms worn by the army during the 17th to 19th centuries.

Fort Ticonderoga

A historic fort in New York that played a significant role in the American Revolutionary War after being captured by American forces in 1775.