Which of the following statements is most correct? Group of answer choices If a project with...
Which of the following statements is most correct?
Group of answer choices
If a project with normal cash flows has an IRR, which exceeds the cost of capital (required rate of return), then the project must have a positive NPV.
If the IRR of Project A exceeds the IRR of Project B, then Project A must also have a higher NPV.
Assuming a project has normal cash flows, the NPV will be positive if the IRR is less than the cost of capital (discount rate).
None of these are correct.
Homework Answers
Correct option is: If a project with normal cash flows has an IRR, which exceeds the cost of capital (required rate of return), then the project must have a positive NPV.
Option 2 is incorrect. The NPV may depend upon the size of the project.
Option 3 is incorrect. IRR < Cost of capital would give a negative NPV
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Which of the following statements is most correct?
Group of answer choices
If a project with...
Which of the following statements is CORRECT? Assume that the project being considered has normal cash...
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 A) If a project's IRR is positive, then its NPV must also be positive. B) A project's IRR is the discount rate that causes the PV of the inflows to equal the project's cost. C) If a project's IRR is smaller than the WACC, then its NPV will be positive....
Which of the following statements is CORRECT? a. If a project has normal cash flows, then...
Which of the following statements is CORRECT? a. If a project has normal cash flows, then its IRR must be positive. b. If a project has normal cash flows, then its MIRR must be positive. c. If a project has normal cash flows, then it can have two NPVs. d. If a project has normal cash flows, then it can have two IRRs. e. If a project has normal cash flows, then it cannot have two IRRs. vi. Which of...
8) Project A has an internal rate of return (IRR) of 15 percent. Project B has...
8) Project A has an internal rate of return (IRR) of 15 percent. Project B has an IRR of 14 percent. Both projects have a required retum of 12 percent. Which of the following statements is MOST correct? A) Project A must have a higher NPV than Project B. B) Both projects have a positive net present value (NPV) C) Project B has a higher profitability index than Project A. D) If the required return were less than 12 percent,...
Which of the following statements is CORRECT? Assume that the project being considered has normal cash...
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 compounding the cash inflows at the cost of capital to find the terminal value (TV), then discounting this TV at the cost of capital. b. To find a project's IRR, we must find a discount rate that is equal to the cost of capital. c. If...
8. Which of the following statementele mele wing statements is correct for a project with a...
8. Which of the following statementele mele wing statements is correct for a project with a positive NPV? A) IRR exceeds the cost of capital B) Accepting the project has an indeterminate effect on shareholders C) The discount rate exceeds the cost of capital. D) The profitability index equals one. 9. If the net present value of a project which costs $20,000 is $5,000 when the discount rate is 10%, then the: A) project's IRR equals 10%. B) project's rate...
Question 30 (1 point) Which of the following statements is CORRECT? Assume that the project being...
Question 30 (1 point) 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 project's regular IRR is found by compounding the initial cost at the WACC to find the terminal value (TV), then discounting the TV at the WACC. A project's regular IRR is found by compounding the cash inflows at the WACC to find the present value (PV), then discounting the...
Project A has an internal rate of return (IRR) of 15 percent. Project B has an...
Project A has an internal rate of return (IRR) of 15 percent. Project B has an IRR of 14 percent. Both projects have a cost of capital of 12 percent. Which of the following statements is most correct? Question 3 options: Both projects have a positive net present value (NPV). Project A must have a higher NPV than Project B. If the cost of capital were less than 12 percent, Project B would have a higher IRR than Project A....
Which of the following statements is CORRECT? To find the MIRR, we first compound cash flows...
Which of the following statements is CORRECT? 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. The NPV and IRR methods both assume that cash flows can be reinvested at the WACC. However, the MIRR method assumes reinvestment at the MIRR itself. If two projects have the same cost, and if their NPV profiles cross in the upper right...
15. Which of the following statements is correct for a project with positive net present worth...
15. Which of the following statements is correct for a project with positive net present worth (PW)? The MARR exceeds the IRR. Accepting the project has an indeterminate effect on the firm. The IRR exceeds the MARR. All cash flows must be positive except year 0 cash flow. . mume MARR to be 12% for each project
Based on the principles of capital budgeting, which of the following statements is most correct? Select...
Based on the principles of capital budgeting, which of the following statements is most correct? Select one: O A. If a project's cash flows are classified as "normal", its MIRR must be positive. B. If a project's cash flows are classified as "normal", it will have multiple potential IRRs. O C. "Normal" cash flows are defined as a cash flow stream that has one or more negative cash flows followed by a stream of positive cash flows and then one...
Which of the following statements is CORRECT? a. If a project has normal cash flows, then its IRR must be positive. b. If a project has normal cash flows, then its MIRR must be positive. c. If a project has normal cash flows, then it can have two NPVs. d. If a project has normal cash flows, then it can have two IRRs. e. If a project has normal cash flows, then it cannot have two IRRs. vi. Which of...
8) Project A has an internal rate of return (IRR) of 15 percent. Project B has an IRR of 14 percent. Both projects have a required retum of 12 percent. Which of the following statements is MOST correct? A) Project A must have a higher NPV than Project B. B) Both projects have a positive net present value (NPV) C) Project B has a higher profitability index than Project A. D) If the required return were less than 12 percent,...
8. Which of the following statementele mele wing statements is correct for a project with a positive NPV? A) IRR exceeds the cost of capital B) Accepting the project has an indeterminate effect on shareholders C) The discount rate exceeds the cost of capital. D) The profitability index equals one. 9. If the net present value of a project which costs $20,000 is $5,000 when the discount rate is 10%, then the: A) project's IRR equals 10%. B) project's rate...
Question 30 (1 point) 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 project's regular IRR is found by compounding the initial cost at the WACC to find the terminal value (TV), then discounting the TV at the WACC. A project's regular IRR is found by compounding the cash inflows at the WACC to find the present value (PV), then discounting the...
15. Which of the following statements is correct for a project with positive net present worth (PW)? The MARR exceeds the IRR. Accepting the project has an indeterminate effect on the firm. The IRR exceeds the MARR. All cash flows must be positive except year 0 cash flow. . mume MARR to be 12% for each project
Based on the principles of capital budgeting, which of the following statements is most correct? Select one: O A. If a project's cash flows are classified as "normal", its MIRR must be positive. B. If a project's cash flows are classified as "normal", it will have multiple potential IRRs. O C. "Normal" cash flows are defined as a cash flow stream that has one or more negative cash flows followed by a stream of positive cash flows and then one...
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