cost of capital.

Question $22(4$ points$)$

Assume that the project being considered has normal cash flows, with one outflow

followed by a series of inflows. Which statement would be correct?

a$)$ The NPV of a relatively low$-$risk project should be found using a relatively

high cost of capital.

b$)$ The lower the cost of capital used to calculate a project's NPV$,$ the lower the

calculated NPV will be$.$

c$)$

If a project's NPV is less than zero, then its IRR must be less than the cost of

capital.

d$)$ A project's NPV is found by compounding the cash inflows at the IRR to find

the terminal value $($TV$),$ then discounting the TV at the cost of capital.

Question $23(4$ points$)$

What is the required rate of return for the XYZ$,$ Inc., which holds four stocks? The

market's required rate of return is $15\mathrm{.}0\%,$ the risk$-$free rate is $7\mathrm{.}0\%,$ and the fund's