Which of the Following Statements Is CORRECT

question 71

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 the time value of money.
• B) One defect of the IRR method versus the NPV is that the IRR does not take account of the cost of capital.
• C) 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.
• D) 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.
• E) 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.

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Definitions:

Growing Rapidly

A phase characterized by a significant increase in a company's revenue, profits, or size within a short period.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations based on its operating income.

Return on Stockholders' Equity

A measure of the profitability of a corporation in relation to the equity held by its shareholders, calculated as net income divided by shareholder equity.

Return on Total Assets

A measure of a company's profitability, indicating how effectively it uses its assets to generate earnings.