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1. Assume a project has normal cash flows. All...

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Question

1. Assume a project has normal cash flows. All else equal, which of the following statements is correct? , (Points: 10), (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. , (E) The projects discounted payback increases as the WACC declines. 2. Which of the following statements is most correct? (Points: 10) (A) (A). If a project with normal cash flows has an IRR which exceeds the cost of capital, then the project must have a positive NPV. (B) (B). If the IRR of Project A exceeds the IRR of Project B, then Project A must also have a higher NPV. (C) C ). The modified internal rate of return (MIRR), which always provides the higher return as compared to the Internal Rate of Return (IRR), should be used because of its optimistic view on the project's return. . (D) (D). Answers b and c are correct. (E) (E). None of the answers above is correct.

 

Paper#5690 | Written in 18-Jul-2015

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