Which of the Following Statements About Irr Is Not True

Answer - K R. 17 The internal rate of return IRR is.

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Find the internal rate of return IRR for the following series of future cash flows.

. A Each project has a unique internal rate of return. With sufficient funds we should accept all projects with apositive Profitability Index. Which of the following statements is false.

Finance questions and answers. Which of the following statements is CORRECT. A the discount rate that makes the NPV greater than zero for a given set of cash flows.

A The internal rate of return IRR is insensitive to the size of capital investments. IRR does not take into account the difference in the scale of investment alternatives. The payback rule ignores the time value of money The IRR rule is biased against longer term projects IRR measures the break-even cost of capital for a project IRR is represented by the y-intercept on an NPV profile The payback rule is biased against longer term projects.

When undertaking one project prevents investing in another project and vice versa the projects have a positive payback. NPV assumes that cash flows are reinvested at the cost of capital of the firm. The other statements are false.

The IRR is the interest rate that sets the NPV equal to zero. A conventional project has an initial cash outflow followed by one or more expected future cash. Natt Ltd is considering undertaking a project that would yield annual profits after depreciation of 68000 for 5 years.

Internal Rate of Return. Which of the following statements about IRR and NPV is incorrect. The rate of discount at which NPV of a project becomes zero is also known as.

B The discount rate exceeds the cost of capital. A negative NPV indicates that a project should beaccepted. Which of the following statements is true regarding capitalbudgeting.

Chapter 15 Multiple-choice questions. C The profitability index PI is insensitive to the size of capital investments. Finance questions and answers.

C the opportunity cost of the capital invested in the project. For a project to be accepted IRR should be more than its cost of capital. The initial outlay of the project would be.

Sign changes in the cash flow stream can generate more than one IRR. NPV and IRR yield the same ranking when evaluating projects. O The supply curve for reserves is completely controlled by the Federal Reserve.

If NPV is positive the IRR will be Positive. Which of the following statements is NOT true. Answer - Internal Rate of Return.

The Federal Reserve controls the discount rate but not the amount of nonborrowed reserves. Statement b is true because a projects NPV increases as the WACC declines. The demand curve for reserves is completely controlled by the Federal Reserve.

Average Rate of Return. B In case the capital investments are mutually exclusive and different in terms of sizethe internal rate of return IRR cannot be used as a decision criterion. IRR assumes that funds generated from a project will be reinvested at an interest rate equal to the projects IRR.

If the projects are mutually exclusive then project B may have a higher NPV even though Project A has a higher IRR. The initial outlay is 651200. B the discount rate that sets the FV of future CFs equal to the initial cash outlay.

None of the above. D In case the capital. Which of the following is not true regarding the IRR.

A The IRR must be greater than 0. One defect of the IRR method is that it does not take account of cash flows over a projects full life. Which of the following statements is NOT true.

IRR is easier to visualize and interpret than net present value NPV. Which of the following statements about the market for reserves is true. The accounting rate of return is measured as follows.

Which of the following statements is correct regarding the internal rate of return IRR method. A project should be accepted if it has an IRR less than therequired rate of return. B As long as you are not dealing with mutually exclusive projects capital rationing or unusual projects having multiple sign changes in the cash-flow stream the internal rate of return.

Up to 25 cash back Which of the following statements is true. A project may have multiple IRRs when the sign of the cash flow changes more than once. The payback rule is biased against longer term projects A project can have multiple IRRS IRR measures the break-even cost of capital for a project The payback rule ignores the time value of money The IRR rule ignores the time value of money.

The cash inflows and outflows associated with a project are as follows. A mutually exclusive project can be chosen independently of other projects B. If the cash flow stream has one or more cash outflows interspersed with cash inflows there can be multiple IRRs.

The internal rate of return is the rate at which the net present value of a project is equal to zero. One defect of the IRR method is that it does not take account of the time value of money. Statement a is true.

C The profitability index equals 1. D Accepting the project has. The IRR is the interest rate that sets the present value of a projects cash inflows equal to the present value of the projects cost.

If the cash flow stream has one or more cash outflows interspersed with cash inflows there can be multiple IRRs. One defect of the IRR method is that it does. Alternative Rate of Return.

IRR is calculated assuming cash flows are reinvested at the IRR not the cost of capital. Correct option is E The internal rate of return is the rate at which the net present value of a project is equal to zero. D the economic rate of return of a given project.

For a project to be accepted IRR should be more than its cost of capital.

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