Discount rate used to determine net present value of project

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Reference no: EM131320423

1. If a project's NPV is greater than zero, then the

A - project adds value to the firm

B - project destroys firm value

C - investment is also greater than the present value of cash flows

D - project does not increase shareholders wealth

2. The discount rate used to determine the net present value of a project is the

A- CAPM return

B- risk-free rate of interest

C- cost of debt

D- cost of capital of the firm

3. Which of the following statements are correct?

A - if a project's NPV is less than zero, then its IRR must be less than the WACC

B - the lower the WACC used to calculate a project's NPV, the lower the calculated NPV will be

C - if a project's NPV s greater than zero, then its IRR must be less than zero

D - The NPV of a relatively low-risk project should be found using a relatively high WACC.

Reference no: EM131320423

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