Question

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 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 increases as the WACC declines.

Step 1

The correct answer is option (e). The weighted average cost of capital includes the cost of capital of each type of source of capit...

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