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.

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Definitions:

Direct Labor Time Variance

The calculation difference between the expected time to produce an item and the actual time taken, impacting cost control and labor efficiency.

Unfavorable Cost Variance

A situation where actual costs exceed the expected or budgeted costs, indicating that a company is spending more than planned.

Revenue Volume Variance

The difference between the actual sales revenue received and the expected revenue, based on the budgeted sales volume.

Revenue Price Variance

The difference between the actual revenue generated by selling a product at its current price and the expected revenue at a predetermined price.