Project being considered has normal cash flows

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Reference no: EM132022411

1. Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. Which of the following statements is CORRECT?

A. If a project's IRR is greater than the WACC, then its NPV must be negative.

B. A project's regular IRR is found by discounting the cash inflows at the WACC to find the present value (PV), then compounding this PV to find the IRR.

C. To find a project's IRR, we must find a discount rate that is equal to the WACC.

D. To find a project's IRR, we must solve for the discount rate that causes the PV of the inflows to equal the PV of the project's costs.

2. Suppose Pierce is currently distributing 75.00 of its earnings in the form of cash dividends. It has also historically generated and average return of equity (ROE) of 10.00. Pierce’s estimated growth rate is ___ (option answers: 9.75, 35.00, 2.50, 10.25)

Reference no: EM132022411

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