Which of the Following Statements Is FALSE

question 44

Multiple Choice

Which of the following statements is FALSE?

• A) 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.
• B) If the cost of capital estimate is more than the internal rate of return (IRR), the net present value (NPV) will be positive.
• C) The internal rate of return (IRR) can provide information on how sensitive your analysis is to errors in the estimate of your cost of capital.
• D) In general, the difference between the cost of capital and the internal rate of return (IRR) is the maximum amount of estimation error in the cost of capital estimate that can exist without altering the original decision.

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Definitions:

Plot Sampling

Using demographics observed in sample plots to estimate demographics of a population as a whole.

Per Capita Growth Rate

Refers to the rate of population growth per individual within a given time frame, often used to assess changes in population size relative to the current population.

Exponential Growth Rate

Exponential Growth Rate describes the increase of a quantity by a consistent rate over proportional time intervals, commonly observed in populations lacking resource limitations.