Which of the Following Is Most Correct

question 24

Multiple Choice

Which of the following is most correct?

• A) The NPV and IRR rules will always lead to the same decision in choosing between mutually exclusive projects, unless one or both of the projects are "non-normal" in the sense of having only one change of sign in the cash flow stream.
• B) The Modified Internal Rate of Return (MIRR) compounds cash outflows at the cost of capital.
• C) Conflicts between NPV and IRR rules arise in choosing between two mutually exclusive projects (that each have normal cash flows) when the cost of capital exceeds the crossover point (that is, the point at which the NPV profiles cross).
• D) The discounted payback method overcomes the problems that the payback method has with cash flows occurring after the payback period.
• E) None of the statements above is correct.

---

Definitions:

MMPI-2

The Minnesota Multiphasic Personality Inventory-2, a widely used standardized test for assessing personality traits and psychopathology.

MBTI

Myers-Briggs Type Indicator, a personality inventory based on Jungian psychological types, used to understand individual differences.

TAT

A projective psychological test (Thematic Apperception Test) that asks respondents to tell stories about ambiguous pictures.

CPI

Consumer Price Index, a measure assessing the average change over time in the prices paid by consumers for a basket of goods and services.