Which of the following statements is CORRECT?
A) If a project with normal cash flows has an IRR greater than the WACC,the project must also have a positive NPV.
B) If Project A's IRR exceeds Project B's,then A must have the higher NPV.
C) A project's MIRR can never exceed its IRR.
D) If a project with normal cash flows has an IRR less than the WACC,the project must have a positive NPV.
E) If the NPV is negative,the IRR must also be negative.

Question

Quizplus · Accepted Answer

A project with normal cash flows (initial outlay followed by a series of positive cash inflows) and an IRR (Internal Rate of Return) greater than the WACC (Weighted Average Cost of Capital) indicates that the project's return exceeds its cost of capital, thus it will have a positive NPV (Net Present Value).

Which of the Following Statements Is CORRECT