18. Consider projects S and L. Both have normal cash flows and the projects have the same risk, hence both are evaluated with the same cost of capital, 10%. However, S has a higher IRR than L. Which of the following statements is CORRECT? A. If project S has a positive NPV, Project L must also have a positive NPV. B. If the cost of capital increases, each project's IRR will decrease. C. If the cost of capital fails, each project's IRR will increase. D. If Projects S and L have the same NPV at the current cost of capital, 10%, then Project L, the one with the lower IRR, would have a higher NPV if the cost of capital used to evaluate the projects decline.

18. Consider projects S and L. Both have normal cash flows and the projects have the same risk, hence both are evaluated with the same cost of capital, 10%. However, S has a higher IRR than L. Which of the following statements is CORRECT? A. If project S has a positive NPV, Project L must also have a positive NPV. B. If the cost of capital increases, each project's IRR will decrease. C. If the cost of capital fails, each project's IRR will increase. D. If Projects S and L have the same NPV at the current cost of capital, 10%, then Project L, the one with the lower IRR, would have a higher NPV if the cost of capital used to evaluate the projects decline.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

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