A company considers a new project. The required rate of return (WACC) on the project is 10 percent. Which of the following statement is correct?
A. If the projectâs NPV = $1,500, the company should accept the project.
B. If the projectâs IRR < 10 percent, the company should accept the project.
C. If the projectâs MIRR < 10 percent, the company should accept the project.
D. If the projectâs PI > 0, the company should accept the project.
E. If the projectâs payback period > required cutoff payback, the company should accept the project.
F. If the projectâs NPV < 0 and IRR > 10 percent, the company should accept the project.
A company considers a new project. The required rate of return (WACC) on the project is 10 percent. Which of the following statement is correct?
A. If the projectâs NPV = $1,500, the company should accept the project.
B. If the projectâs IRR < 10 percent, the company should accept the project.
C. If the projectâs MIRR < 10 percent, the company should accept the project.
D. If the projectâs PI > 0, the company should accept the project.
E. If the projectâs payback period > required cutoff payback, the company should accept the project.
F. If the projectâs NPV < 0 and IRR > 10 percent, the company should accept the project.
Related questions
1.Lasik Vision Inc. recently analyzed the project whose cash flows are shown below. However, before Lasik decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firmâs WACC. The Fedâs action did not affect the forecasted cash flows. By how much did the change in the WACC affect the projectâs forecasted NPV? Note that a projectâs projected NPV can be negative, in which case it should be rejected.
| Old WACC: Year | 8.00% | 0 | New WACC: 11.25% 1 | 2 | 3 | |
| Cash flows | â$1,000 | $410 | $410 | $410 | ||
| a. â$59.03 | ||||||
| b. â$56.08 | ||||||
| c. â$53.27 | ||||||
| d. â$50.61 | ||||||
| e. â$48.08 |
