Which of the following statements is FALSE?
A: The IRR investment rule will identify the correct decision in many, but not all, situations.
B: By setting the NPV equal to zero and solving for r, we find the IRR.
C: If you are unsure of your cost of capital estimate, it is important to determine how sensitive your analysis is to errors in this estimate.
D: The simplest investment rule is the NPV investment rule.
A: The IRR investment rule will identify the correct decision in many, but not all, situations.
B: By setting the NPV equal to zero and solving for r, we find the IRR.
C: If you are unsure of your cost of capital estimate, it is important to determine how sensitive your analysis is to errors in this estimate.
D: The simplest investment rule is the NPV investment rule.
举一反三
- Which of the following statements is FALSE? A: The payback investment rule is based on the notion that an opportunity that pays back its initial investments quickly is a good idea. B: An internal rate of return (IRR) will always exist for an investment opportunity. C: A net present value (NPV) will always exist for an investment opportunity. D: In general, there can be as many internal rates of return (IRRs) as the number of times the project's cash flows change sign over time.
- Which of the following is NOT a problem associated with the internal rate of return (IRR) method for making investment decisions:（） A: IRR and NPV criteria can give conflicting decisions for mutually exclusive projects. B: if the IRR is above the firm’ s cost of capital, the project should be rejected. C: The IRR method assumes cash flows are reinvested at the investment’ s internal rate of return.
- Which of the following statements is FALSE? A: The incremental IRR need not exist. B: If a change in the timing of the cash flows does not affect the NPV, then the change in timing will not impact the IRR. C: Although the incremental IRR rule can provide a reliable method for choosing among projects, it can be difficult to apply correctly. D: When projects are mutually exclusive, it is not enough to determine which projects have positive NPVs.
- Compared with the net present value (NPV) method, the internal rate of return (IRR) method of evaluating investment projects:() A: is the preferred method for evaluating mutually exclusive projects. B: is not sensitive to the pattern or timing of the cash flows from the period. C: assumes that all cash flows from the project will be reinvested at the computed IRR.
- Which of the following statements is themostaccurate description concerning the internal rate of return (IRR) method? IRR: A: is the preferred method for evaluating mutually exclusive projects. B: assumes that all cash flows from a project will be reinvested at the computed IRR. C: is sensitive to changes in the firm’s weighted average cost of capital.