With Independent Projects, NPV and IRR Provide Identical Accept/reject Decisions

question 70

Multiple Choice

With independent projects, NPV and IRR provide identical accept/reject decisions. If, however, you have two mutually exclusive projects to evaluate, the most accurate thing you could say about the eventual results is that:

• A) NPV and IRR may give conflicting rankings
• B) NPV and IRR never give the same rankings
• C) NPV and IRR always give the same rankings
• D) IRR is more lenient in accepting

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, which does not necessarily reflect its market value.

Market Value

The current price at which an asset or service can be bought or sold in a open and competitive market.

Par Value

A nominal value assigned to a share of stock for legal purposes, often used in calculating equity or debt issues.

Shares Issued

Refers to the total number of shares that a company has officially distributed to shareholders, including both public investors and corporate insiders.