Assume project has normal cash flows

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Reference no: EM131900741

1. Which of the following statements is CORRECT?

a. The IRR is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

b. The payback method is generally better than NPV method.

c. Profitability index and NPV usually provide the same accept/reject results, although they do not necessarily rank acceptable projects in the same order.

d. The MIRR is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

e. Both b and c

2. Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT?

a. A project’s IRR increases as the Weighted Average Cost of Capital (WACC) declines.

b. A project’s MIRR is unaffected by changes in the WACC.

c. A project’s regular payback increases as the WACC declines.

d. A project’s discounted payback increases as the WACC declines.

e. A project’s NPV decreases as the WACC increase.

Reference no: EM131900741

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