The IRR of a Project Whose Cash Flows Accrue Relatively

question 55

True/False

The IRR of a project whose cash flows accrue relatively rapidly is more sensitive to changes in the discount rate than is the IRR of a project whose cash flows come in more slowly.

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Definitions:

Investment Turnover

A measure of a company's efficiency in using its assets to generate sales revenue; calculated as sales divided by the investment in assets.

Return on Investments

A metric for assessing how effectively an investment generates returns in comparison to its expense.

Controllable Revenues

Revenues over which a manager or department has influence or direct control, often used in performance evaluation and budgeting.

Residual Income

The net income an entity generates above its cost of capital, a measure of profitability that calculates the surplus after accounting for the cost of capital.