Net Present Value Is Preferred to Internal Rate of Return

question 86

Multiple Choice

Net present value is preferred to internal rate of return for capital budgeting decisions because

• A) the internal rate of return does not allow you to determine if the project is acceptable.
• B) the net present value is the only method that allows you to determine which independent project is acceptable.
• C) the net present value allows you to compare mutually exclusive projects.
• D) the internal rate of return for a project is different for each firm.
• E) NPV contains information about a projects "safety margin" which is not inherent in IRR.

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Definitions:

Aboriginals

Indigenous peoples native to a land or region, especially referring to the First Nations, Inuit, and Métis peoples of Canada.

American West

A region of the United States located west of the Mississippi River, characterized by its diverse landscapes, history of expansion and settlement, and cultural significance.

Agricultural Production

Refers to the process of cultivating crops and livestock for human consumption and use.