16. If a company\'s WACC is 10%, which of the following projects will be accepte
ID: 2620729 • Letter: 1
Question
16. If a company's WACC is 10%, which of the following projects will be accepted? Select all that apply:
IRR = 8%
MIRR = 12%
NPV = $100,000
MIRR = 9%
14. As interest rates go up, which of the following is true? Select all that apply:
Bond Prices go down.
The NPV of a project goes down.
The NPV of a project goes up.
The NPV of a short term project goes down quicker than the NPV of a long term project.
IRR = 8%
MIRR = 12%
NPV = $100,000
MIRR = 9%
14. As interest rates go up, which of the following is true? Select all that apply:
Bond Prices go down.
The NPV of a project goes down.
The NPV of a project goes up.
The NPV of a short term project goes down quicker than the NPV of a long term project.
Explanation / Answer
(16) Company's WACC = Cost of Capital = 10 %, IRR = 8 %, An IRR lower than the cost of capital is value erosive in nature, thereby being unacceptable. MIRR of 12 % entails that it is greater than the firm's cost of capital of 10 %(WACC) thereby being value accretive in nature. Hence, this project should be accepted. A positive NPV of $ 10000 is favourable and hence this project too should be accepted.
NOTE: Please raise separate queries for the solution to the remaining unrelated question.
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