Which of the Following Is Not a Limitation of the IRR

question 33

Multiple Choice

Which of the following is not a limitation of the IRR capital budgeting technique?

• A)It does not take into account the size of the project.
• B)It is difficult to calculate without using trial and error,a financial calculator or a spreadsheet.
• C)The rule must be modified if it is an investing project or a financing project.
• D)Multiple IRR values can arise if the project has both positive and negative future cash flows.
• E)All of the above are limitations of the IRR technique.

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Definitions:

Marginal Revenue

The supplementary income obtained from the sale of an extra unit of a product or service.

Total Revenue

The aggregate monetary gain a corporation obtains from its product or service sales, without accounting for any expenditures.

Demand Schedule

A table outlining the different quantities of goods or services that consumers are interested in and can feasibly buy at numerous price levels.

Total Revenue

The total income generated by the sale of goods or services before any costs are deducted.