The Two Fatal flAws of the Internal Rate of Return

question 28

Multiple Choice

The two fatal flaws of the internal rate of return rule are:

• A)arbitrary determination of a discount rate and failure to consider initial expenditures.
• B)arbitrary determination of a discount rate and failure to correctly analyze mutually
• Exclusive investment projects.
• C)arbitrary determination of a discount rate and the multiple rate of return problem.
• D)failure to consider initial expenditures and failure to correctly analyze mutually exclusive
• Investment projects.
• E)failure to correctly analyze mutually exclusive investment projects and the multiple rate of
• Return problem.

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Definitions:

Unearned Ticket Revenue

Money received from ticket sales before the event or services have been provided; considered a liability until the service is rendered.

Season Tickets

A type of ticket that grants the holder access to a set number of events, typically for sports teams, theaters, or public transport, over a specific period.

Football Season

The period during the year when football games are officially organized and played across various leagues and competitions.

Productive Facilities

Assets such as factories and machinery used in the production of goods and services.