The Reason Why the IRR Criterion Can Give Conflicting Signals

question 102

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:

Pancreatic Protease

Enzymes produced by the pancreas that break down proteins into smaller peptides.

Amylase

An enzyme that catalyzes the hydrolysis of starch into sugars.

Trypsin

A digestive enzyme produced in the pancreas and secreted into the small intestine, where it breaks down proteins into smaller peptides.

Small Intestine

The part of the gastrointestinal tract between the stomach and large intestine, where most of the digestion and absorption of nutrients takes place.