Which of the following statements is CORRECT? a. To find the MIRR, we discount t

Question

Which of the following statements is CORRECT? a. To find the MIRR, we discount the TV at the IRR. b. When evaluating independent projects, the NPV and IRR methods often yield conflicting results regarding a project's acceptability. c. A project's NPV profile must intersect the X-axis at the project's WACC. d. The IRR method appeals to some managers because it gives an estimate of the rate of return on projects rather than a dollar amount, which the NPV method provides. e. The discounted payback method eliminates all of the problems associated with the payback method.

Explanation / Answer

A: cash outflows discounted finance rate and cash inflows discounted at investment rate; or more generally, they both are discounted at WACC

B: Not always; decision changes over the crossover rate; additionally, conflict arises with the irregular cash flow

C: NPV profile intersects X-axis at IRR

D: Yes, it does

E: Not really

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