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12. Which of the following statements about NPV is correct? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows A. If a project's NPV is greater than zero, then its IRR must be less than zero. B. If a project's NPV is greater than zero, then its IRR must be less than the WACC C. The higher the WACC used to calculate the NPV, the lower is the calculated NPV will be D. A project's NPV is generally found by compounding the cash inflows at the WACC to find the terminal value (TV), then discounting the TV at the IRR to find its PV. . 13. You are on the staff of O'Hara Ino, The CFO believes project acceptance should be based on the NPV, but Andrew O'Hara, the president, insists that no project should be accepted unless its IRR exceeds the project's risk-adjusted WACC. Now you must make a recommendation on a project that has a cost of $15,000 and two cash flows: $110,000 at the end of Year 1 and $100,000 at the end of Year 2. The president and the CFO both agree that the appropriate WACC for this project is 10%. At 10%, the NPV is $2,355.37, but you find two IRRs, one at 6.33% and one at 527%, and a MIRR of 11.32%. Which of the following statements best describes your optimal recommendation, i.e., the analysis and recommendation that is best for the company and least likely to get you in trouble with either the CFO or the president? A. You should recommend that the project be rejected because, although its NPV is positive, has an IRR that is less than the WACC. -B. You should recommend that the project be accepted because (1) its NPV is positive and ce although it has two IRRs, in this case it would be better to focus on the MIRR, which exceed the WACC. You should explain this to the president and tell him that the firm's value w increase if the project is accepted. .C. You should recommend that the project be rejected. Although its NPV is positive it has the IRRS, one of which is less than the WACC, which indicates that the firm's value will decline the project is accepted. .D. You should recommend that the project be rejected because, although its NPV is positive, la MIRR is less than the WACC, and that indicates that the firm's value will decline if it accepted. 14. Which of the following statements about capital budgeting techniques is correct? A. Multiple IRRs can exist, but not multiple MIRRs. This is one reason some people favor the MIRR over the regular IRR. B. If a firm uses the discounted payback method with a required payback of 4 years, then it will accept more projects than if it used a regular payback of 4 years. C. The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods should consistently lead to the same accept reject decisions for independent projects. D. For mutually exclusive projects with normal cash flows, the NPV and MIRR methods can never conflict, but their results could conflict with the discounted payback and the regular IRR methods

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