Assuming that a project being considered has normal cash flows, with an outflow followed by a series
Fantastic news! We've Found the answer you've been seeking!
Question:
Assuming that a project being considered has normal cash flows, with an outflow followed by a series of inflows, which statement would be correct?
a) The lower the cost of capital used to calculate the NPV of a project, the lower the calculated NPV will be.
b) If the NPV of a project is less than zero, then its IRR must be less than the cost of capital.
c) The NPV of a project is calculated by adding the cash inflows to the IRR to find the terminal value (TV), and then discounting the TV to the cost of capital.
d) The NPV of a relatively low risk project must be found using a relatively high cost of capital.
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date: