Which of the Following Statements Is Correct

question 12

Multiple Choice

Which of the following statements is correct?

• A)In general, the NPVs of riskier cash flows should be found using relatively high discount rates.However, if a cash flow is negative, it should be evaluated using a low discount rate.
• B)If a project has only costs (no revenues) as would certain environmental projects, then the project is likely to have two regular IRRs.
• C)If the NPV and IRR methods give conflicting rankings for two mutually exclusive projects, the payback period should be used to choose the project that should be purchased.
• D)It is better to use the NPV method to evaluate independent projects, but for mutually exclusive projects, especially if projects vary greatly in size, the IRR method is better.
• E)None of the above is a correct statement.

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Field Size

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