question archive Which of the two statements A and B is correct? NB: if you think the two statements are correct, you should answer C, if you think the two statements are not correct, you should answer D
Which of the two statements A and B is correct? NB: if you think the two statements are correct, you should answer C, if you think the two statements are not correct, you should answer D
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Which of the two statements A and B is correct? NB: if you think the two statements are correct, you should answer C, if you think the two statements are not correct, you should answer D. A - Consider a project the cash flows of which are conventional (cash flows change sign only once). If the NPV of this project is positive, then its IRR will necessarily be larger than the COC relevant to study this project. B - Consider a project the cash flows of which are conventional (cash flows change sign only once). The NPV and the IRR criteria will lead to the same decision regarding whether one should invest in this project or not. OC - Both statements are correct. O D - None of these two statements are correct.
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If there is a sign change only once, it means that there will be only one IRR value. Hence, statement A is correct as if the NPV is positive, the IRR value will also be more than the cost of capital. This also means that statement B is also true as they are leading to the same decision regarding investment. Hence, option C is correct
