Which of the following statements is CORRECT?
A) 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.
B) The lower the WACC used to calculate a project's NPV, the lower the calculated NPV will be.
C) If a project's NPV is less than zero, then its IRR must be less than the WACC.
D) If a project's NPV is greater than zero, then its IRR must be less than zero.

Question

Quizplus · Accepted Answer

If a project's NPV is less than zero, it indicates that the project's IRR is less than the WACC, meaning the project is not expected to generate returns above the cost of capital.

Which of the Following Statements Is CORRECT