The Internal Rate of Return (IRR)Model Suffers from Three Problems

question 15

Multiple Choice

The Internal Rate of Return (IRR) Model suffers from three problems.Which of the below is NOT one of these problems?

• A)Comparing mutually exclusive projects
• B)Cumbersome computations not resolvable by the latest technology
• C)Incorporates the IRR as the reinvestment rate for the future cash flows
• D)Multiple IRRs

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Definitions:

Expected Value

Is the predicted value of a variable, calculated as the sum of all possible values each multiplied by the probability of its occurrence.

Service Contract

A legally binding agreement between two or more parties where one agrees to provide a specified service to the other for a payment.

Peace of Mind

A state of mental and emotional tranquility, free from stress or worry.

Availability Heuristic

A cognitive shortcut based on the first examples that spring to mind when considering a particular topic, idea, strategy, or choice.