Which of the Following Is a Major Limitation of Using

question 54

Multiple Choice

Which of the following is a major limitation of using the internal rate of return as a tool in capital budgeting?

• A) Ignores the time value of money
• B) Does not consider cash flows
• C) Does not use accounting numbers
• D) Assumes unrealistic reinvestment rate

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Definitions:

Marginal Profit

Marginal profit is the increase in profit that results from selling an additional unit of a product or service.

Marginal Product

The additional output resulting from one more unit of a particular input, showing the contribution of that input to total production.

Marginal Product

The additional output resultant from increasing one unit of a specific input, holding all other inputs constant.

Marginal Profit

The increase in profit that results from selling one additional unit of a product or service.