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

Question

Quizplus · Accepted Answer

This statement is a correct application of the net present value rule. If a project has an internal rate of return greater than the cost of capital (WACC), it means the project is generating a return greater than what it costs to finance it. This should result in a positive net present value, meaning the project generates value for the firm.

Which of the Following Statements Is CORRECT