Which of the Following Statements Is Correct

question 58

Multiple Choice

Which of the following statements is correct?

• A)There can never be a conflict between NPV and IRR decisions if the decision is related to a normal, independent project, i.e., NPV will never indicate acceptance if IRR indicates rejection.
• B)To find the MIRR, we first compound CFs at the regular IRR to find the TV, and then we discount the TV at the required rate of return to find the PV.
• C)The NPV and IRR methods both assume that cash flows are reinvested at the required rate of return. However, the MIRR method assumes reinvestment at the MIRR itself.
• D)If you are choosing between two projects which have the same cost, and if their NPV profiles cross, then the project with the higher IRR probably has more of its cash flows coming in the later years.
• E)A change in the required rate of return would normally change both a project's NPV and its IRR.

Understand the concept and computation of break-even points in both sales units and dollar sales.

Grasp the principle of the contribution margin ratio and its impact on profitability.

Learn how changes in selling price and sales volume affect net operating income.

Calculate the required sales volume to achieve a target profit.

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Definitions:

Extraocular

Referring to muscles, nerves, or movements outside the eyeball itself.

Super-

A prefix denoting above, beyond, or higher in quality or quantity.

Mega-

A prefix indicating a factor of one million, or large size.

Milli-

A prefix in the metric system denoting a factor of one thousandth (10^-3).