Answer:
d. If a project has normal cash flows and its IRR exceeds its cost of capital, then the project's NPV must be positive
TRUE as the IRR makes the net present value match zero discount the projects cash flow at a lower rate will generate a positive NPV
Explanation:
a. If Project A has a higher IRR than Project B, then Project A must also have a higher NPV
FALSE there is a crossover rate at which Project B can achieve a higher present value below this threshold
b. The IRR calculation implicitly assumes that all cash flows are reinvested at the cost of capital
c. The IRR calculation implicitly assumes that cash flows are withdrawn from the business rather than being reinvested in the business
FALSE the IRR is the rate at which discounted future cash flow matches initial cash outlay It does no assumption about wether the cash is reinvested or not.
If the cash is reinvested then another project must be considered with the use of this cash, it doesn't alter the judge for the current project profitability if later on, the company invest on better projects.
e. If Project A has a higher IRR than Project B, then Project A must have the lower NPV.
FALSE for reasons state on (a) there is a cossover rate at which below or above this threshold; one is preferrable over the other
