Which of the Following Statements Concerning the Internal Rate of Return

question 100

Multiple Choice

Which of the following statements concerning the internal rate of return is false?

• A) The internal rate of return for a capital budgeting project is the same for all firms regardless of their cost of capital.
• B) A project is acceptable long as the project's internal rate of return is greater than the hurdle rate for the project.
• C) The internal rate of return is dependent on the timing of the cash flows.
• D) A project with a positive internal rate of return will always increase the value of the firm if the project is accepted.
• E) You do not need to know the required rate of return to solve for the internal rate of return.

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Definitions:

Standard Costs

Predetermined or budgeted costs for products, services, or operations that serve as benchmarks for measuring performance by comparing them with actual costs.

Normal Absorption Costing

A method of product costing that assigns all manufacturing costs to products, including both variable and fixed overhead, based on a normal level of operation.

Budgeted Rate

A predetermined rate used in budgeting to estimate costs or revenues for a specific activity or product.

Work in Process

Inventory that includes materials that have been partially processed but are not yet finished goods.