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 NPV decreases as the WACC declines. c. A project's IRR is unaffected by changes in the WACC. d. A project's discounted payback increases as the WACC declines. e. A project's regular payback increases as the WACC declines.

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Assume a project has normal cash flows

Finance Dec 26, 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 NPV decreases as the WACC declines.
	c.	A project's IRR is unaffected by changes in the WACC.
	d.	A project's discounted payback increases as the WACC declines.
	e.	A project's regular payback increases as the WACC declines.

Expert Solution

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

WACC has not effect on IRR. IRR is calculated independent of WACC. NPV is affected by changes in WACC.

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