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Which of the following are true? A project's IRR is independent of the firm's cost of capital. In other words, a project's IRR doesn't change
Which of the following are true?
A project's IRR is independent of the firm's cost of capital. In other words, a project's IRR doesn't change with a change in
A stock with a beta equal to has zero systematic or market risk.
Bad managerial judgments or unforeseen negative events that happen to a firm are defined as "companyspecific," or "unsyst effects on investment risk can in theory be diversified away.
A stock's beta is more relevant as a measure of risk to an investor who holds only one stock than to an investor who holds a
A basic rule in capital budgeting is that if a project's NPV exceeds its IRR, then the project should be accepted.
All other things held constant, the present value of a given annual annuity decreases as the number of periods per year
As a result of compounding, the effective annual rate on a bank deposit or a loan is always equal to or greater than th deposit or loan
An increase in the firm's WACC will decrease projects' NPVs which could change the acceptreject decision for any po such a change would have no impact on projects' IRRs. Therefore, the acceptreject decision under the IRR method is capital.
An individual stock's diversifiable risk, which is measured by its beta, can be lowered by adding more stocks to the pol held.
Conflicts between two mutually exclusive projects occasionally occur, where the NPV method ranks one project high the other one first. In theory, such conflicts should be resolved in favor of the project with the higher positive NPV
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