The Reason Why the IRR Criterion Can Give Conflicting Signals

question 56

Multiple Choice

The reason why the IRR criterion can give conflicting signals with mutually exclusive projects is:

• A)The NPVs of these projects cross over at some discount rate
• B)Discounted cash flow is not considered with mutually exclusive projects
• C)IRR performs better with accounting returns than with cash flows
• D)Mutually exclusive projects have multiple IRRs

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Definitions:

Fixed Interval Schedule

A type of reinforcement schedule in operant conditioning where the first response after a fixed time period is rewarded.

Variable Ratio Schedule

A reinforcement schedule in which a response is rewarded after an unpredictable number of responses, promoting high and stable rates of the response.

Unpredictable Amount

A quantity or volume that cannot be precisely foreseen or estimated due to varying factors or conditions.

Negative Reinforcement

A process in operant conditioning by which the removal or avoidance of an unpleasant stimulus increases the likelihood of a behavior being repeated.