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Which two of the following five statements are correct? Select two alternatives: One potential problem with the IRR rule is that one can find several
Which two of the following five statements are correct?
Select two alternatives:
- One potential problem with the IRR rule is that one can find several IRRs or that no IRR can be found for a specific stream of cash flows.
- The payback rule is reliable because it considers the time value of money and depends on the cost of capital.
- For the IRR rule it is possible that there exists no discount rate that will set the NPV equal to zero.
- If we use future value rather than present value to decide whether to make an investment, we will make a bad decision, since the future value will always be lower if the discount rate is positive.
- The NPV profile shows the payback period - the point at which NPV is positive.
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