Question

Which of the following statements is correct? Assume the project being considered has normal cash flows, with one outflow, followed by a series of inflows:

If a project’s NPV is > 0, the IRR must be less than WACC |
||

The higher the WACC used to calculate NPV, the lower the calculated NPV will be |
||

The NPV’s of relatively risky projects should be found using relatively low WACC’s |
||

If a project’s NPV is > 0, the IRR must be less than zero. |

Answer #1

**Answer: The higher the WACC used to calculate NPV, the
lower the calculated NPV will be**

This is because the NPV is inversely proportional to discount rate used for cash flow discounting. Higher the discount rate, lower would the NPV be.

If a project’s NPV is > 0, the IRR must be less than WACC. This is false. When project's NPV > 0, IRR > WACC.

The NPV’s of relatively risky projects should be found using relatively low WACC’s. This is false. Riskier the project, higher should the WACC or discount rate be.

If a project’s NPV is > 0, the IRR must be less than zero.. False because when NPV > 0, IRR would be positive and higher than WACC

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 NPV of a relatively low-risk project should be found
using a relatively high WACC
B: The lower the WACC used to calculate it, the lower the
calculated NPV will be If a project’s NPV is greater than zero,
then its IRR must be less than zero
C: If a project’s NPV is...

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 NPVs of relatively risky projects should be found using
relatively low costs of capital.
b.
If a project's NPV is greater than zero, then its IRR must be
less than the cost of capital.
c.
The higher the cost of capital used to calculate the NPV, the
lower the calculated NPV will...

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.
Group of answer choices
The lower the cost of capital used to calculate a project's NPV,
the lower the calculated NPV will be.
If a project's NPV is less than zero, then its IRR must be less
than the cost of capital.
If a project's NPV is greater than zero, then its IRR must...

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 IRR calculation implicitly
assumes that all cash flows are reinvested at the WACC. b. If a
project has normal cash flows and its IRR exceeds its WACC, then
the project’s NPV must be positive. c. If Project A has a higher
IRR than Project B, then Project A must also have a...

If a project being considered has normal cash flows, with one
outflow followed by a series of inflows, which of the following
statements is CORRECT?
A If a project's NPV is greater than zero, then its IRR must be
less than the WACC.
B If a project's NPV is greater than zero, then its IRR must be
less than zero.
C The higher the WACC used to calculate the NPV, the lower the
calculated NPV will be.
D A project's...

If you assume that a project being considered has normal cash
flows, with one outflow followed by a series of inflows, which
statement would be correct? Question 11 options:
a) The lower the cost of capital used to calculate a project's
NPV, 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 cost of capital.
c) A project’s NPV is found by compounding the cash inflows...

Two projects being considered are mutually exclusive and have
the following cash flows:
Year
Project A
Project B
0
−$50,000
−$50,000
1
15,625
0
2
15,625
0
3
15,625
0
4
15,625
0
5
1,562
89,500
If the required rate of return on these projects is 13 percent,
which would be chosen and why?
a.
Project B because of higher NPV.
b.
Project B because of higher IRR.
c.
Project A because of higher NPV.
d.
Project A because of...

Two projects being considered are mutually exclusive and have
the following cash flows:
Year
Project A
Project B
0
−$50,000
−$50,000
1
15,625
0
2
15,625
0
3
15,625
0
4
15,625
0
5
1,562
89,500
If the required rate of return on these projects is 13 percent,
which would be chosen and why?
a.
Project B because of higher NPV.
b.
Project B because of higher IRR.
c.
Project A because of higher NPV.
d.
Project A because of...

1. Which of the following statements is correct?
a. A project with conventional cash flows is one with an initial
cash outflow followed by one or more cash inflows.
b. The NPV method determines how much the future value of cash
inflows exceeds the present value of costs.
c. All the answers are correct.
d. When two projects are independent, accepting one project
implicitly eliminates the other.
e. Conventional cash flow patterns could lead to conflicting
decisions by NPV and...

Which of the
following statements are correct?
a. Consider a
project that generates a negative cash flow in year 0 and a
positive cash flow in year 1. The NPV rule will always lead to the
same decision for this project as the IRR rule.
b. Higher NPV
projects have longer payback periods.
c. Two projects with
identical expected cash flows but different risk profiles have the
same IRR. d. IRR is affected by the scale of the investment
opportunity.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 12 minutes ago

asked 19 minutes ago

asked 28 minutes ago

asked 34 minutes ago

asked 59 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago