One Weakness of the Internal Rate of Return Approach Is

question 17

Multiple Choice

One weakness of the internal rate of return approach is that:

• A)it does not directly consider the timing of the cash flows from a project
• B)it fails to provide a straightforward decision-making criterion
• C)it implicitly assumes that the firm is able to reinvest the interim cash flows from a project at the firm's cost of capital.
• D)none of these

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Definitions:

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to standardize and make uniform the regulations across the states.

Inventory Purchasing

The process of acquiring goods and materials that a company intends to sell in its normal business operations.

Sporting Goods Store

A retail business specializing in the sale of sports equipment and related items for various physical activities and sports.

Lump-sum

A one-time payment executed at a specific moment, rather than several payments spread out over a period.