Which of the Following Statements Is CORRECT

question 46

Multiple Choice

Which of the following statements is CORRECT?

• A) The MIRR and NPV decision criteria can never conflict.
• B) The IRR method can never be subject to the
• C) One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption.
• D) The higher the WACC, the shorter the discounted payback period.
• E) The MIRR method assumes that cash flows are reinvested at the crossover rate.

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Definitions:

Dividends

Dividends are payments made by a corporation to its shareholder members, representing a portion of the corporate profits distributed.

Dividend-payout Ratio

The percentage of net income paid to shareholders in the form of dividends.

Share Price

The price of a single share of a number of saleable stocks of a company, derivative, or other financial asset.

Plowback Ratio

Plowback Ratio, also known as the retention ratio, is the proportion of earnings that a company retains and reinvests in its operations, rather than distributing as dividends.