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Which of the following is not true regarding the internal rate of return method of evaluating investments? a. The internal rate of return is the

Which of the following is not true regarding the internal rate of return method of evaluating investments?

a.

The internal rate of return is the rate of return of an investment project over its useful life.

b.

When a project has identical cash flows in every year, dividing the investment required by the annual net cash inflow results in a factor that can be used to determine the internal rate of return.

c.

The internal rate of return method focuses on cash flows rather than accounting net income.

d.

The internal rate of return is the discount rate that results in a projects net present value being a positive number

Which of the following is true?

a.

The payback method can be a useful tool for companies that are cash poor and consider a faster return of cash more important than a higher rate of return.

b.

The payback method provides a true measure of the profitability of a project.

c.

The payback method cannot be used when an investments cash flows are different from year to year.

d.

A project with the shortest payback period is always the most desirable investment.

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