When a Project Has Multiple Internal Rates of Return, the Analyst

question 35

Multiple Choice

When a project has multiple internal rates of return, the analyst should ____.

• A) choose the highest rate to compare with the firm's cost of capital
• B) choose the lowest rate to compare with the firm's cost of capital
• C) choose the rate that seems most "reasonable," given the project's cash flows, to compare with the firm's cost of capital
• D) compute the project's net present value and accept the project if its NPV is greater than $0

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