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

---

Definitions:

Estate Planning Services

Professional services aimed at assisting individuals in managing the distribution of their assets and wealth after their death.

Two-part Tariff

A pricing strategy where the price of a product or service is composed of two parts: a fixed fee plus a variable charge based on usage or consumption.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually pay.

Reservation Prices

The maximum price a consumer is willing to pay for a good or service, beyond which they will not purchase it.