Which of the Following Statements Is CORRECT

question 99

Multiple Choice

Which of the following statements is CORRECT?

• A) One defect of the IRR method versus the NPV is that the IRR does not take account of cash flows over a project's full life.
• B) One defect of the IRR method versus the NPV is that the IRR does not take account of the time value of money.
• C) One defect of the IRR method versus the NPV is that the IRR does not take account of the cost of capital.
• D) One defect of the IRR method versus the NPV is that the IRR values a dollar received today the same as a dollar that will not be received until sometime in the future.
• E) One defect of the IRR method versus the NPV is that the IRR does not take proper account of differences in the sizes of projects.

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Definitions:

Demand Instrument

A financial document that requires the payment of money immediately or on demand.

Time Of Payment

The specific period or date by which payment for goods or services received must be made.

Voidable Instrument

A financial document or contract that is valid but may be annulled by one or more of the parties to the contract.

IOU Instrument

A document acknowledging a debt or an obligation to pay a specified sum of money to another party.