Assume a project has normal cash flows (i.e. the initial cash flow is negative and all other cash flows are positive). Which of the following statements is most correct? All else equal, a project’s IRR increases as the cost of capital declines. All else equal, a project’s NPV increases as the cost of capital declines. All else equal, a project’s MIRR is unaffected by changes in the cost of capital. None of the above
Assume a project has normal cash flows (i.e. the initial cash flow is negative and all other cash flows are positive). Which of the following statements is most correct? All else equal, a project’s IRR increases as the cost of capital declines. All else equal, a project’s NPV increases as the cost of capital declines. All else equal, a project’s MIRR is unaffected by changes in the cost of capital. None of the above
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 16MC: When using the NPV method for a particular investment decision, if the present value of all cash...
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Assume a project has normal cash flows (i.e. the initial cash flow is negative and all other cash flows are positive). Which of the following statements is most correct?
- All else equal, a project’s
IRR increases as the cost of capital declines. - All else equal, a project’s
NPV increases as the cost of capital declines. - All else equal, a project’s MIRR is unaffected by changes in the cost of capital.
- None of the above
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