Which Statement Regarding the IRR Method Is Correct

question 60

Multiple Choice

Which statement regarding the IRR method is correct?

• A)One defect of the IRR method is that it does not take account of cash flows over a project's full life.
• B)One defect of the IRR method is that it does not take account of the time value of money.
• C)One defect of the IRR method is that it does not take account of the cost of capital.
• D)One defect of the IRR method is that it does not assume that the cash flows to be received from a project can be reinvested at a rate other than the IRR itself.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, and jurisdiction.

Deflation

A decrease in the general price level of goods and services, often indicating an economy in decline.

Farmers

Individuals engaged in agricultural activities, aimed at producing food and other crops.

Fed

Short for the Federal Reserve System, it's the central banking system of the United States, responsible for monetary policy.