What is the MIRR for a project with the following cash flows if the WACC is 12%?
-1,200,000
150,000
200,000
-75,000
350,000
500,000
750,000
Choices are: 10.12%, 10.45% or 10.87%
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Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.
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a. |
The lower the WACC used to calculate a project’s NPV, the lower the calculated NPV will be. |
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b. |
If a project’s NPV is less than zero, then its IRR must be less than the WACC. |
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c. |
If a project’s NPV is greater than zero, then its IRR must be less than zero. |
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d. |
The NPV of a relatively low-risk project should be found using a relatively high WACC. |
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e. |
A project’s NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the WACC. |
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Which of the following statements is CORRECT?
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a. |
If Project A’s IRR exceeds Project B’s, then A must have the higher NPV. |
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b. |
A project’s MIRR can never exceed its IRR. |
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c. |
If a project with normal cash flows has an IRR less than the WACC, the project must have a positive NPV. |
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d. |
If the NPV is negative, the IRR must also be negative. |
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e. |
If a project with normal cash flows has an IRR greater than the WACC, the project must also have a positive NPV. |
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