Suppose that you are looking at a project that has normal cash flows (negative at the beginning and then all positives). Which of the following is true? Multiple Choice If the NPV of the project is positive, the IRR must be lower than the required return of the project. If the NPV of the project is positive, the IRR must equal zero. You may have multiple IRR's. If the NPV of the project is positive, the IRR must be higher than the required return of the project.

Suppose that you are looking at a project that has normal cash flows (negative at the beginning and then all positives). Which of the following is true? Multiple Choice If the NPV of the project is positive, the IRR must be lower than the required return of the project. If the NPV of the project is positive, the IRR must equal zero. You may have multiple IRR's. If the NPV of the project is positive, the IRR must be higher than the required return of the project.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 16MCQ: Using IRR, a project is rejected if the IRR a. is equal to the required rate of return. b. is less...

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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. Select one: a. The lower the WACC used to calculate it, the lower the calculated NPV will be. b. If a project's NPV is greater than zero, then its IRR must be less than zero. c. The NPV of a relatively low-risk project should be found using a relatively high WACC. d. A project's NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the WACC. e. If a project's NPV is less than zero, then its IRR must be less than the WACC.
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If a project's cash flows are discounted at the internal rate of return, the NPV will always be negative. T/F