Assume a project has normal cash flows (i.e., initial cash flow is negative, and all other cash flows are positive). Which of the following statements is most correct?
A)All else equal, a project's IRR increases as the required rate of return declines.
B)All else equal, a project's NPV increases as the required rate of return declines.
C)All else equal, a project's IRR is unaffected by changes in the required rate of return.
D)Answers a and b are both correct.
E)Answers b and c are both correct.

Question

Quizplus · Accepted Answer

The Answer of Assume a project has normal cash flows (i.e., initial cash flow is negative, and all other cash flows are positive). Which of the following statements is most correct?
A)All else equal, a project's IRR increases as the required rate of return declines.
B)All else equal, a project's NPV increases as the required rate of return declines.
C)All else equal, a project's IRR is unaffected by changes in the required rate of return.
D)Answers a and b are both correct.
E)Answers b and c are both correct.

Assume a Project Has Normal Cash Flows (I