Which of the Following Statements Is CORRECT

question 24

Multiple Choice

Which of the following statements is CORRECT?

• A) One advantage of the NPV over the IRR is that NPV takes account of cash flows over a project's full life whereas IRR does not.
• B) One advantage of the NPV over the IRR is that NPV assumes that cash flows will be reinvested at the WACC,whereas IRR assumes that cash flows are reinvested at the IRR.The NPV assumption is generally more appropriate.
• C) One advantage of the NPV over the MIRR method is that NPV takes account of cash flows over a project's full life whereas MIRR does not.
• D) One advantage of the NPV over the MIRR method is that NPV discounts cash flows whereas the MIRR is based on undiscounted cash flows.
• E) Since cash flows under the IRR and MIRR are both discounted at the same rate (the WACC),these two methods always rank mutually exclusive projects in the same order.

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Chart of Accounts

A systematic list of accounts that a company uses for the organization of its financial transactions and to prepare financial statements.

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The cost incurred by a company for the salaries of its employees.

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A record in accounting that notes the details of a financial transaction.

Posting Reference

An alphanumeric code or number used to identify the original journal entry in the ledger, facilitating the tracking of transactions and their origins in accounting records.