Assume a project has normal cash flows

Finance Dec 23, 2020

Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT? a. A project's MIRR increases as the WACC declines. b. A project's regular payback increases as the WACC declines. C. A project's discounted payback increases as the WACC declines. d. A project's IRR is unaffected by changes in the WACC. e. A project's NPV decreases as the WACC declines.

Expert Solution

A project's IRR is unaffected by changes in the WACC

WACC does not have any affect on IRR. IRR calculation is independent to changes in WACC.

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