The NPV and IRR Methods, When Used to Evaluate Two

question 37

True/False

The NPV and IRR methods, when used to evaluate two independent and equally risky projects, will lead to different accept/reject decisions and thus capital budgets if the projects' IRRs are greater than their cost of capital.

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Definitions:

Depletion

The allocation of the cost of natural resources over the period they are consumed or sold.

Residual Value

The estimated value that an asset will realize upon its sale at the end of its useful life, after deducting the cost of disposal.

Service Life

The expected duration or period an asset is considered useful and productive for its intended purpose.