Which of the following statements is FALSE? We need to know the cost of capital

Question

Which of the following statements is FALSE?

We need to know the cost of capital (WACC) in order to use the NPV rule.

If the cost of capital (WACC) is less than the IRR, the NPV will be positive.

In order to maximize shareholder wealth, reject capital budgeting projects with a negative NPV.

When faced with a set of alternative investments, choose the one with the lowest NPV in order to minimize the present value of the costs

We need to know the cost of capital (WACC) in order to use the NPV rule.

If the cost of capital (WACC) is less than the IRR, the NPV will be positive.

In order to maximize shareholder wealth, reject capital budgeting projects with a negative NPV.

When faced with a set of alternative investments, choose the one with the lowest NPV in order to minimize the present value of the costs

Explanation / Answer

Ans When faced with a set of alternative investments, choose the one with the lowest NPV in order to minimize the present value of the costs

Ans When faced with a set of alternative investments, choose the one with the lowest NPV in order to minimize the present value of the costs

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