Question
Which of the following statements is CORRECT? Assume that the investment will be in a product line that has normal cash flows, with one outflow
Which of the following statements is CORRECT? Assume that the investment will be in a product line that has normal cash flows, with one outflow followed by a series of inflows.
| The NPV of a relatively low-risk investment should be found using a relatively high WACC. |
| If a investments NPV is greater than zero, then its IRR must be less than zero. |
| A investment's NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the WACC. |
| If a investment's NPV is less than zero, then its IRR must be less than the WACC. |
| The lower the WACC used to calculate it, the lower the calculated NPV will be. |
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