Which of the Following Statements About the Internal Rate of Return

question 67

Multiple Choice

Which of the following statements about the internal rate of return (IRR) is true?

• A) It has the most conservative and realistic reinvestment assumption.
• B) It never gives conflicting answers.
• C) It fully considers the time value of money.
• D) It is greater than the modified internal rate of return if the discount rate is higher than the IRR.

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Definitions:

Elasticity of Demand

The measure of how much the quantity demanded of a good responds to a change in the price of that good.

Quantities Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level.

Inelastic

Describes a situation where the demand or supply for a good or service is relatively unresponsive to changes in price.

Available Substitutes

Alternative products or services that consumers can use to satisfy the same needs or desires as the product or service in question.