FIN 534 - Homework Chapter 10 Answers

1. Which of the following statements is CORRECT?

a. The NPV profile graph for a normal project will generally have a positive (upward) slope as the life of the project increases.

b. An NPV profile graph is designed to give decision makers an idea about how a project's risk varies with its life.

c. An NPV profile graph is designed to give decision makers an idea about how a project's contribution to the firm's value varies with the cost of capital.

d. We cannot draw a project's NPV profile unless we know the appropriate WACC for use in evaluating the project's NPV.

e. An NPV profile graph shows how a project's payback varies as the cost of capital changes.

1. Which of the following statements is CORRECT? Assume that the project being...