16. Which of the following statements is CORRECT b. An NPV profile graph is designed c An NPV profile graph The NPV profile graph for a. life of the project increases varies with its life. contribution to the tinm's value varies with the cost of capital a normal project will generally have a positive to give decision makers an idea about how a project's risk is designed to give decision makers an idea about how a projects e cannot draw a project's NPV profile unless we know the appropr An NPV profile graph shows how a project's payback varies as the project's NPV Npy, p e. 17. Projects C and D both have has a higher the following statements is whereas Project Dhasa ligher NPV if the WACC exceeds 12%. t C probably has a faster payback normal cash flows and are mutually exclusive. Project C NPV if the WACC is less than 12%, Proyect Which of the following statements is CORRI a. Project D is probably larger in b. Projec c. Project C probably has a higher IRR d. The scale than Project C. d. The crossover rate between the two projects is below 12. e. Project D probably has a higher IRR. 18. Laramie Labs sset its assets vary widely in risk, uses a risk-adjustment when evaluating projects of different risk. Its overall (composite) WACC is 10%, which reflects the cost of capital for its average a aramie evaluates low-risk projects with a WACC of 8%, average-risk projects at 10%, and high- risk projects at 12%. The company is considering the following projects: Expected Return 15% 12% 11% 9% 6% Risk High Average Project Low Which set of projects would maximize shareholder wealth? a. A and B. b. A, B, and C. c. A, B, and D. d. A, B, C, and D. e. A, B, C, D, and E. 19. The firm's target capital structure should be consistent with which of the following statements? a. Minimize the cost of debt (rd). b. Obtain the highest possible bond rating. CMinimize the cost of equity (rs). d. Minimize the weighted average cost of capital (WACC) e. Maximize the earnings per share (EPS)