Internal Rate of Return (IRR) and Net Present Value (NPV)

question 38

Multiple Choice

Internal rate of return (IRR) and net present value (NPV) methods:

• A) generally arrive at the same accept/reject decisions
• B) are less sophisticated than the payback period
• C) cannot make use of the same cash flows
• D) can be substituted for by the payback period

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Definitions:

Existing Firms

Companies or businesses that are currently in operation within a particular market or industry.

Fixed Cost

Expenses that do not change with the level of output or sales in the short term, such as rent, salaries, and insurance.

Insurance Payment

A sum of money paid regularly to an insurance company for a policy, which provides financial protection against loss or harm.

Shipping Charges

The fees associated with the transport of goods from the seller to the buyer, often based on factors like weight, distance, and delivery speed.