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Project has normal cash flows

Assume a project has normal cash flows. All else equal, which of the following statements is correct?

-The projects IRR increases as the WACC declines

- The projects NPV increases as the WACC declines

- The projects MIRR is unaffected by changes in WACC

-The projects regular payback increases as the WACC declines

-The projects discounted payback increases as the WACC declines

3) The regular payback method has a number of disadvantages, some of which are listed below, Which of these items is not a disadvantage of this method?

- lack of objective,market determined benchmark for making decisions

- Ignores cash flows beyond the payback period

- Does not directly account for the time value of money

-does not provide any indication regarding a projects liquidity

- does not directly account for differences in risk among projects

Solution Preview

) Assume a project has normal cash flows. All else equal, which of the following statements is correct?

-The projects IRR increases as the WACC declines

- The projects NPV increases as the WACC declines

- The projects MIRR is unaffected by ...

Solution Summary

The solution examines a project with normal cash flows.

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