Question 1
2 out of two points
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| Imagine the economy is in a mild economic depression, and as a result interest rates and funds costs generally are comparatively low. The WACC for two mutually exclusive projects that are being regarded is 8%. Project T has an IRR of 20% while Task L's IRR is 15%. The assignments have the same NPV at the 8% current WACC. However , you think that the economic system is about to recoup, and money costs and so your WACC will also increase. You also think that the projects will not be funded until the WACC has increased, and their cash moves will not be affected by the change in economic circumstances. Under these kinds of conditions, which usually of the subsequent statements is proper? Answer | | | | | Selected Answer: | You must recommend Project S, mainly because at the fresh WACC it provides the higher NPV. | Accurate Answer: | You should advise Project T, because in the new WACC it will have the higher NPV.
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Question 2
2 out of 2 points
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| Which in the following assertions is CORRECT? Response | | | | | Picked Answer: | Multiple IRRs can occur as long as the signs of the money flows modify more than once. | Correct Answer: | Multiple IRRs can occur only if the signs of the cash moves change more often than once.
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Question 3
2 out of 2 points
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| Which in turn of the subsequent statements is proper? Answer | | | | | Selected Response: | 1 advantage of the NPV over the IRR is the fact NPV assumes that cash flows will probably be reinvested with the WACC, whereas IRR assumes that money flows will be reinvested at the IRR. The NPV presumption is generally appropriate. | Correct Answer: | One benefit of the NPV over the IRR is that NPV assumes that cash goes will be reinvested at the WACC, whereas IRR assumes that cash goes are reinvested at the IRR. The NPV assumption is normally more appropriate.
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Problem 4
2 away of 2 items
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| Which of the following statements is CORRECT? Response | | | | | Picked Answer: | One problem of the IRR method is it assumes the cash moves to be received from task management can be reinvested at the IRR itself, and this assumption is normally not valid. | Appropriate Answer: | One defect of the IRR method is it assumes that the cash moves to be received from a project can be reinvested at the IRR itself, which assumption can often be not valid.
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Question 5
2 out of 2 points
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| Which of the next statements is proper? Assume that the project becoming considered provides normal cash flows, with one outflow followed by a number of inflows. Response | | | | | Picked Answer: | If a project has typical cash runs and its IRR exceeds their WACC, then this project's NPV must be great. | Appropriate Answer: | If a project has typical cash runs and its IRR exceeds its WACC, then the project's NPV must be confident.
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Question 6th
two out of two points
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| Assume that the economy is usually enjoying a solid boom, and thus interest rates and money costs generally will be relatively substantial. The WACC for two contradictory projects that are to be considered can be 12%. Job S has a IRR of 20% whilst Project L's IRR can be 15%. The projects have a similar NPV on the 12% current WACC. Yet , you believe the economy will soon fall into a gentle recession, and money costs and thus the WACC will soon decline. In addition, you think that the projects will not be funded until the WACC features decreased, and their cash flows will not be impacted by the change in economic circumstances. Under these kinds of conditions, which usually of the following statements is proper? Answer | | | | | Selected Solution: | You must recommend Job L, because at the new WACC it'll have the higher NPV. | Accurate Answer: | You should recommend Project M, because on the new WACC it will have the greater NPV.
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Query 7
2 away of 2 details
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| Which will of the pursuing statements is CORRECT? Assume that the...
