Which Three of the Following Are Disadvantages of Using the IRR

question 38

Multiple Choice

Which three of the following are disadvantages of using the IRR method rather than the NPV method of project appraisal?

• A) IRR ranks in terms of percentage returns whereas NPV ranks in terms of amounts of money.
• B) IRR has an implicit reinvestment assumption at the IRR itself which is not reasonable.
• C) If the cash flows are non- conventional there may be more than one IRR.
• D) IRR does not take into account the time value of money.

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