Which of the Following Statements Concerning the IRR Is True

question 9

Multiple Choice

Which of the following statements concerning the IRR is true?

• A) The IRR does not take account of the time value of money.
• B) The IRR does not take account of the all the project cash flows.
• C) The IRR is the sum of the discounted cash flows of a project.
• D) The IRR is the discount rate that, when applied to a project's cash flows, gives an NPV of zero.

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Definitions:

Utilitarianism

A moral theory that suggests the best action is the one that maximizes utility, typically defined as that which produces the greatest well-being of the greatest number of people.

Deontology

An ethical theory that emphasizes duty and rules over the outcomes of actions.

Hedonism

A philosophical theory or approach that argues that pleasure and happiness are the primary or most important intrinsic goods and the aim of human life.

Pragmatism

A philosophical approach that assesses the truth of meaning of theories or beliefs in terms of the success of their practical application.