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.
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.
举一反三
- 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.
- 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.
- The internal rate of return (IRR) method and net present value (NPV) method of project selection will always provide the same accept or reject decision when:（） A: the projects are mutually exclusive. B: the projects are independent. C: the projects terminate within five years.
- 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.
- The profitability index is the ratio of the A: future value of cash flows to investment. B: net present value of cash flows to investment. C: net present value of cash flows to IRR. D: present value of cash flows to IRR.