Which of the Following Is Not an Important Advantage of the Net

question 68

Multiple Choice

Which of the following is not an important advantage of the net present value (NPV) method over the internal rate of return (IRR) method in evaluating capital investment proposals?

• A) NPV facilitates comparisons of mutually exclusive projects requiring different amounts of initial investments.
• B) NPV facilitates comparisons among mutually exclusive projects that have the same useful life but different initial outlays.
• C) NPV can be used to determine an optimum capital budget under conditions of capital rationing, while IRR cannot.
• D) NPV is relatively intuitive (compared, for example, to IRR).
• E) IRR relies on discounted cash-flow analysis, while NPV does not.

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Definitions:

Pyridine

A basic heterocyclic organic compound with the chemical formula C5H5N, resembling benzene but having a nitrogen atom replacing one of the carbon atoms.

Orbital

A region in an atom where there is a high probability of finding electrons.

Increasing pKa

This refers to the process or trend of increasing the acidity constant (pKa), indicating a decrease in acid strength.

Resonance Structures

Different Lewis structures for the same molecule that depict different possible arrangements of electrons.