Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.
A. A project's regular IRR is found by compounding the initial cost at the WACC to find the terminal value (TV), then discounting the TV at the WACC.
B. A project's regular IRR is found by compounding the cash inflows at the WACC to find the present value (PV), then discounting the TV to find the IRR.
C. If a project's IRR is smaller than the WACC, then its NPV will be positive.
D. A project's IRR is the discount rate that causes the PV of the inflows to equal the project's cost.
E. If a project's IRR is positive, then its NPV must also be positive.
Answer: D
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