Which of the Following Statements Is FALSE

question 35

Multiple Choice

Which of the following statements is FALSE?

• A)In general,the difference between the cost of capital and the IRR is the maximum amount of estimation error in the cost of capital estimate that can exist without altering the original decision.
• B)The IRR can provide information on how sensitive your analysis is to errors in the estimate of your cost of capital.
• C)If you are unsure of your cost of capital estimate,it is important to determine how sensitive your analysis is to errors in this estimate.
• D)If the cost of capital estimate is more than the IRR,the NPV will be positive.

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Definitions:

Earned

Earned typically refers to income or revenue that has been generated from businesses activities or investments and is recognized upon the delivery of goods or services.

Clients

Individuals or entities that receive services or products from a business in exchange for payment.

Liability Insurance

Insurance that provides protection against claims resulting from injuries and damage to people and/or property, covering legal costs and payouts for which the insured party is responsible.

Prepaid

Expenses that are paid for in advance of receiving the benefit, often recorded as assets until the expense is incurred.