Which of the Following Statements Concerning the Internal Rate of Return

question 100

Multiple Choice

Which of the following statements concerning the internal rate of return is false?

• A) The internal rate of return for a capital budgeting project is the same for all firms regardless of their cost of capital.
• B) A project is acceptable long as the project's internal rate of return is greater than the hurdle rate for the project.
• C) The internal rate of return is dependent on the timing of the cash flows.
• D) A project with a positive internal rate of return will always increase the value of the firm if the project is accepted.
• E) You do not need to know the required rate of return to solve for the internal rate of return.

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Definitions:

Buildings

Physical structures used for business operations or investment, considered as fixed assets on a company's balance sheet.

Partial Equity Method

An accounting method that recognizes the initial investment at cost and incorporates the investor's share of the investee's net income or losses to some extent, not fully as in the full equity method.

Noncontrolling Interest

A minority share of ownership in a subsidiary that is not enough to control its operations, held by investors outside of the parent company.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating the company's financial performance over a specified period.