Question
nternal rate of return (IRR) has many uses in corporate finance, from estimating yield to maturity of a bond to capital budgeting. Please mark the
nternal rate of return (IRR) has many uses in corporate finance, from estimating yield to maturity of a bond to capital budgeting. Please mark the only correct use of IRR:
a. | IRR is useful for capital budgeting because it gives the analyst an upper bound for your estimated cost of capital for the firm below which the NPV is still positive | |
b. | When choosing projects, IRR is always right while NPV not always will give you the right answer | |
c. | IRR is reliable because it always provides the analyst with only one answer
| |
d. | IRR rule is accurate for capital budgeting when cash inflows are followed by outflows |
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