Which of the Following Statements About Comparing the Techniques of Net

question 103

Multiple Choice

Which of the following statements about comparing the techniques of net present value (NPV) and internal rate of return (IRR) is (are) correct?
I. The net present value assumes that all cash flows are reinvested at the cost of capital and is therefore realistic.
II. The internal rate of return is stated as a percent and is therefore easy to communicate to decision-makers who may not understand the fine points of finance.

• A) Only statement I is correct.
• B) Only statement II is correct.
• C) Both statements I and II are correct.
• D) Neither statement I nor II is correct.

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