Ranking Conflicts Can Arise If One Relies on IRR Instead

question 184

Multiple Choice

Ranking conflicts can arise if one relies on IRR instead of NPV when:

• A) The first cash flow is negative and the remaining cash flows are positive.
• B) Projects are independent of one another.
• C) A project has more than one NPV.
• D) Projects are mutually exclusive.
• E) The profitability index is greater than one.

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Definitions:

Variables

Variables are symbols or names that represent values or quantities in mathematical expressions, statistical models, and scientific experiments.

Axes

Lines or reference points used in graphs and diagrams to represent different variables.

Origin

The point where the axes of a two-variable graph meet.

Graph

A visual representation of data, functions, or relationships between two or more variables, usually depicted using axes to show variations across dimensions.