A Manager Will Prefer the IRR Rule Over the NPV

question 275

Multiple Choice

A manager will prefer the IRR rule over the NPV rule if the manager:

• A) Prefers to talk in terms of rates of return.
• B) Can accurately forecast future cash flows.
• C) Dislikes the discounted payback analysis.
• D) Also prefers use of payback analysis.
• E) Is considering mutually exclusive projects.

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Definitions:

Joint Production Process

A manufacturing process in which two or more products are produced simultaneously from the same raw materials or inputs.

Budgeted Data

Forecasted or planned financial information used for budgeting and planning purposes.

Special Molds

Custom-designed molds used in manufacturing processes to produce unique product shapes or designs.

Variable Costs

Expenses that change in proportion to the activity of a business, such as the cost of raw materials used in production.