NPV May Be Preferred to IRR Because​

question 48

Multiple Choice

NPV may be preferred to IRR because​

• A) ​IRR makes the more conservative assumption concerning reinvestment
• B) ​NPV makes the more conservative assumption concerning reinvestment
• C) ​IRR excludes salvage value
• D) ​NPV includes salvage value

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Definitions:

Capital Projects

Large, long-term investments undertaken by a company or government to create, expand, or improve physical assets such as buildings, infrastructure, or equipment.

Total Assets

The sum of all assets owned by a company, including both current and non-current assets, as reported on the balance sheet.

Stock Repurchase

A company's buyback of its own shares from the marketplace, usually to increase the value of remaining shares by reducing supply.

Book Value

The net value of a company's assets, subtracting its liabilities and intangible assets, often used to assess whether a stock is under- or overvalued.