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Which one of the following is true for the internal rate of return (IRR) method? It assumes cash proceeds during the life of a project
Which one of the following istruefor the internal rate of return (IRR) method?
- It assumes cash proceeds during the life of a project can be reinvested to earn the same rate of return as the weighted-average cost of capital.
- Depending on the pattern of after-tax cash flows, multiple IRRs for a given proposed investment are possible.
- IRRs of multiple projects are additive (that is, can be added together).
- It can be used to make optimal decisions regarding mutually exclusive investment projects.
- It makes it easy to incorporate multiple costs of capital.
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