Which of the Following Statements Related to the Internal Rate

question 5

Multiple Choice

Which of the following statements related to the internal rate of return (IRR) are correct?
I.The IRR is the discount rate at which an investment's NPV equals zero.
II.An investment should be undertaken if the discount rate exceeds the IRR.
III.The IRR tends to be used more than net present value simply because its results are easier to comprehend.
IV.The IRR is the best tool available for deciding between mutually exclusive investments.

• A) I and II only
• B) I and III only
• C) II and III only
• D) I, II, and IV only
• E) I, II, III, and IV
• F) None of the above.

---

Definitions:

Direct Control

A management approach that involves explicitly regulating process, decisions, and actions within an organization to ensure compliance and achieve objectives.

Decision Making

The cognitive process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Gathering Information

The process of collecting data or facts from various sources to understand a situation, problem, or topic better.

Specific Event

A particular occurrence or happening, often one of significance, that is distinct and identifiable in time and place.