Question
Which of the following statements is incorrect? Question 1 options: The internal rate of return is that discount rate which equates the present value of
Which of the following statements is incorrect?
Question 1 options:
The internal rate of return is that discount rate which equates the present value of the cash outflows (or costs) with the present value of the cash inflows. | |
If a project's NPV exceeds the project's IRR, then the project should be accepted. | |
When NPV and IRR methods do not agree on two mutually exclusive projects, the decision should generally be resolved in favor of the project with the higher NPV. | |
The NPV method's assumption that cash inflows are reinvested at the cost of capital is more reasonable than the IRR's assumption that cash flows are reinvested at the IRR. | |
The NPV and IRR methods, when used to evaluate independent projects with normal cash flows, will lead to the same accept/reject decision. |
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