Which of the Following Statements Is FALSE

question 52

Multiple Choice

Which of the following statements is FALSE?

• A)The IRR investment rule states you should turn down any investment opportunity where the IRR is less than the opportunity cost of capital.
• B)The IRR investment rule states that you should take any investment opportunity where the IRR exceeds the opportunity cost of capital.
• C)Since the IRR rule is based upon the rate at which the NPV equals zero,like the NPV decision rule,the IRR decision rule will always identify the correct investment decisions.
• D)There are situations in which multiple IRRs exist.

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Definitions:

Prediction Intervals

These are estimates that predict the range within which a future observation will fall, with a certain probability.

Confidence Intervals

A range of values, derived from sample data, that is likely to contain the value of an unknown population parameter, expressed with a certain level of confidence.

Wider

Broad or extended in range, scope, or breadth.

Narrower

Describes something that is more limited in width or scope compared to another.