The NPV and IRR Techniques Can Give Conflicting Results

question 86

Multiple Choice

The NPV and IRR techniques can give conflicting results:

• A)in standalone cases where the project's NPV profile is downward sloping.
• B)in mutually exclusive decisions in which the NPV profiles do not cross.
• C)in mutually exclusive situations in which the NPV profiles cross anywhere.
• D)in mutually exclusive decisions in which the NPV profiles cross in the first quadrant.

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Definitions:

Fixed Dividend

A specified amount of money paid regularly by a company to its shareholders out of its profits or reserves.

Dividend Growth

The annualized percentage rate of growth of a company's dividends per share.

Preferred Stock

A class of ownership in a corporation with a fixed dividend that has precedence over common stock dividends.

Capital Gains Yield

The price appreciation component of a stock's total return, calculated as the increase in the stock price divided by the initial price of the stock.