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:

Equity Method

An accounting technique used to record investments in other companies, where the investment is accounted for based on the investor’s share of the investee's equity.

Stock Investments

Financial assets consisting of stakes in companies through the purchase of common or preferred stock shares, with the expectation of earning dividends or capital gains.

Net Income

The amount of money that remains after all operating expenses, taxes, and dividends have been paid, representing the company's profit.

Cost Method

An accounting method used to value inventory or assets, based on the price paid to acquire them.