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

---

Definitions:

Esteem

The respect, admiration, or value that an individual holds for themselves or that others hold for them.

Social

Relating to society or its organization; pertaining to activities involving interaction with other people.

Valence

The value to the individual of various work outcomes.

Equity Theory

A theory of motivation that suggests individuals assess their job satisfaction based on the ratio of inputs to outcomes and compare it to the perceived ratio of others.