Which of the Following Statements Is Most Correct

question 74

Multiple Choice

Which of the following statements is most correct?

• A) If a project's internal rate of return (IRR) exceeds the cost of capital, then the project's net present value (NPV) must be positive.
• B) If Project A has a higher IRR than Project B, then Project A must also have a higher NPV.
• C) The IRR calculation implicitly assumes that all cash flows are reinvested at a rate of return equal to the cost of capital.
• D) Answers a and c are correct.
• E) None of the answers above is correct.

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Definitions:

Activity-Based Costing

A costing method that assigns costs to products and services based on the activities and resources that go into producing them, aiming to provide more accurate cost information.

Overhead

General business expenses that are not directly tied to specific products or services but are necessary for the overall operation of a business, such as rent, utilities, and administrative costs.

Activity-Based Costing

A costing methodology that assigns overhead and indirect costs to specific activities, improving the accuracy of product and service costing.

Materials Handling Cost

The expenses associated with moving, protecting, and storing goods within a warehouse or manufacturing facility.