Which of the Following Statements Is CORRECT

question 72

Multiple Choice

Which of the following statements is CORRECT?

• A) For mutually exclusive projects with normal cash flows, the NPV and MIRR methods can never conflict, but their results could conflict with the discounted payback and the regular IRR methods.
• B) Multiple IRRs can exist, but not multiple MIRRs.This is one reason some people favor the MIRR over the regular IRR.
• C) If a firm uses the discounted payback method with a required payback of 4 years, then it will accept more projects than if it used a regular payback of 4 years.
• D) The percentage difference between the MIRR and the IRR is equal to the project's cost of capital.
• E) The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same accept/reject decisions for independent projects.

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Definitions:

Marginal Revenue

The additional revenue that a firm receives from selling one more unit of a good or service.

Marginal Cost

The extra expense resulting from the manufacture of an additional unit of a product or service.

Competitive Price-Taker

A market participant who cannot influence the price on the market but instead must accept the prevailing market price.

Marginal Revenue

The additional income earned from selling one more unit of a good or service.