Which of the Following Statements Is CORRECT

question 99

Multiple Choice

Which of the following statements is CORRECT?

• A) One defect of the IRR method versus the NPV is that the IRR does not take account of cash flows over a project's full life.
• B) One defect of the IRR method versus the NPV is that the IRR does not take account of the time value of money.
• C) One defect of the IRR method versus the NPV is that the IRR does not take account of the cost of capital.
• D) One defect of the IRR method versus the NPV is that the IRR values a dollar received today the same as a dollar that will not be received until sometime in the future.
• E) One defect of the IRR method versus the NPV is that the IRR does not take proper account of differences in the sizes of projects.

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Definitions:

Total Utility

The overall satisfaction or happiness received from consuming a certain amount of goods or services.

Marginal Utility

The extra pleasure or benefit obtained from consuming an additional unit of a product or service.

Total Utility

The total satisfaction or benefit that a consumer derives from consuming a certain quantity of goods and services.

Marginal Utility

The change in total satisfaction or pleasure derived from consuming one more unit of a good or service.