Which of These Statements About Valuation Models Is NOT Correct

question 97

Multiple Choice

Which of these statements about valuation models is NOT correct?

• A)NPV employs a weighted average cost of capital discount rate that reflects potential reinvestment.
• B)IRR and NPV calculations typically make the same investment recommendations only when the projects are independent of each other.
• C)If cash flows are not normal,IRR may arrive at multiple solutions.
• D)IRR is a more robust determinant of project viability than NPV.

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Definitions:

Per Annum

Annually or per year, often used in the context of interest rates or salaries.

Term Deposit

A type of bank deposit that has a fixed term and typically offers a higher interest rate than savings accounts.

Down Payment

An initial upfront portion of the total amount due, often associated with the purchase of expensive goods like homes or cars, which is paid at the time of the sale.

Term Deposit

A deposit at a financial institution that has a fixed term and typically offers a higher interest rate than a regular savings account.