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bogdanovich [222]
3 years ago
12

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow f

ollowed by a series of inflows.a. A project's regular IRR is found by compounding the cash inflows at the WACC to find the terminal value (TV), then discounting this TV at the WACC.b. A project's regular IRR is found by discounting the cash inflows at the WACC to find the present value (PV), then compounding this PV to find the IRR.c. If a project's IRR is greater than the WACC, then its NPV must be negative. d. To find a project's IRR, we must solve for the discount rate that causes the PV of the inflows to equal the PV of the project's costs.e. To find a project's IRR, we must find a discount rate that is equal to the WACC.
Business
1 answer:
grandymaker [24]3 years ago
6 0

Answer:

d. To find a project's IRR, we must solve for the discount rate that causes the PV of the inflows to equal the PV of the project's costs

Explanation:

The internal rate of return, will be the rate at which the net present value of a project is zero.

net present value = present value fo the cash inflow - investment

using the IRR on the cash inflow we have a present value equal to the investment made, which makes the net present value equal to zero.

Therefore, the IRR is the maximun rate the project can yield

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Answer: $7.50

Explanation:

Given that,

Total value = $950 million

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common equity = $200 million

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Value of equity = Value of firm - Value of preferred stock - Value of long term debt.

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Value\ of\ stock = \frac{Value\ of\ equity}{Number\ of\ shares}

Value\ of\ stock = \frac{750}{100}

                                 = $7.50

                     

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Answer:

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