The Internal Rate of Return (IRR) Is Often Preferred by Managers

question 39

Multiple Choice

The internal rate of return (IRR) is often preferred by managers over the net present value (NPV) because the IRR:

• A) Is more reliable given unconventional cash flows.
• B) Is the discount rate that maximizes net profits.
• C) Is contingent upon the current market rates of return.
• D) Reveals the discount rate that maximizes the net present value.
• E) Is expressed as a rate while the NPV is expressed in dollar terms.

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Definitions:

Ethical Justifications

The reasoning provided to explain why a particular action or decision is morally right.

Self-Serving Decisions

Choices made with the primary aim of benefiting oneself, often at the expense of others or ethical considerations.

Others' Rights

The acknowledgment and respect for the rights and freedoms of other individuals, essential for maintaining ethical and harmonious interactions.

Temporal Immediacy

The degree to which future benefits or consequences are perceived as being imminent or occurring in the near term.