Which of the Following Is an Advantage of the Internal

question 30

Multiple Choice

Which of the following is an advantage of the internal rate of return method?​

• A) It takes into account cash flows occurring only till the time the initial investment is completely paid back.
• B) It does not use present value concepts in valuing cash flows occurring in different periods because this concept can give incorrect results.
• C) It ranks proposals based upon the cash flows over their complete useful life, even if the project lives are not the same.
• D) ​It assumes the cash received from a proposal can be reinvested at the minimum desired rate of return.

---

Definitions:

Establish Causation

The process of demonstrating that one factor directly influences or causes an effect on another factor.

Illusory

Based on illusion; not real or caused by false perceptions or interpretations.

Correlation Coefficient

Represents the degree to which two variables are linearly related, with values ranging from -1 to +1 indicating the strength and direction of the relationship.

Strongest Relationship

The most intense or durable bond between individuals, often characterized by mutual respect, trust, and understanding.