A Company That Is Using the Internal Rate of Return

question 103

Multiple Choice

A company that is using the internal rate of return (IRR) to evaluate projects should accept a project if the IRR:

• A) is greater than the project's net present value.
• B) equates the present value of the project's cash inflows with the present value of the project's cash outflows.
• C) is greater than zero.
• D) is greater than the hurdle rate.
• E) is less than the firm's cost of investment capital.

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Definitions:

Impulsive Behaviors

Actions undertaken without forethought or consideration of the consequences, often driven by immediate gratification or emotional impulse.

Adaptive Problem-Solving

A cognitive process that involves finding effective solutions in new and changing environments.

Reacting Negatively

The process of responding with emotions or actions that are pessimistic or adverse toward stimuli or events.

Psychopathy

Set of broad personality traits including superficial charm, a grandiose sense of self-worth, a tendency toward boredom and need for stimulation, pathological lying, an ability to be cunning and manipulative, and a lack of remorse.