Which of the following statements is CORRECT? Assume that the project being considered has normal...
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Finance
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.
1.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.
2. The NPV of a relatively low-risk project should be found using a relatively high WACC.
3. If a project's NPV is less than zero, then its IRR must be greater than zero.
4. The higher the WACC used to calculate it, the lower the calculated NPV will be.
5. If a project's NPV is greater than zero, then its IRR must be less than the WACC.
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