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 NPV is generally found by compounding the cash inflows at the WACC to find the terminal value (TV),then discounting the TV at the IRR to find its PV.
B) The higher the WACC used to calculate the NPV,the lower the calculated NPV will be.
C) If a project's NPV is greater 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.
E) The NPVs of relatively risky projects should be found using relatively low WACCs.

Question

Quizplus · Accepted Answer

The Net Present Value (NPV) of a project decreases as the Weighted Average Cost of Capital (WACC) increases because the discount rate is higher, reducing the present value of future cash inflows.

Which of the Following Statements Is CORRECT? Assume That the Project