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:

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or deposit, based on a simple calculation without compounding.

360-Day Year

An accounting method where the year is assumed to have 360 days, simplifying interest calculation by using 30-day months.

Ordinary Simple Interest Rate

An interest rate calculation where interest is only earned on the original principal, not on accrued interest.

360-Day Year

An accounting practice that simplifies interest calculations by assuming a year has 360 days.