While the DCF Approach Often Is More Theoretically Sound Than

question 74

True/False

While the DCF approach often is more theoretically sound than the IRR approach (which can have multiple solutions),IRR is more widely used in LBO analyses since investors often find it more intuitively appealing,that is,the higher an investment's IRR,the better the investment's return relative to its cost The IRR is the discount rate that equates the projected cash flows and terminal value with the initial equity investment.