Which of the Following Statements Is CORRECT

question 40

Multiple Choice

Which of the following statements is CORRECT?

• A) The MIRR and NPV decision criteria can never conflict.
• B) The IRR method can never be subject to the multiple IRR problem,while the MIRR method can be.
• C) One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption.
• D) The higher the WACC,the shorter the discounted payback period.
• E) The MIRR method assumes that cash flows are reinvested at the crossover rate.

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Definitions:

Negative Effects

Adverse outcomes or impacts that result from an action, event, or policy.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not affect future business decisions.

Capital Project

A long-term investment undertaken to build, add or improve on a capital asset such as buildings or infrastructure, with the expectation of enhancing value.

Sunk Costs

Costs that have already been incurred and cannot be recovered or refunded.