Which of the Following Statements Is FALSE

question 35

Multiple Choice

Which of the following statements is FALSE?

• A)In general,the difference between the cost of capital and the IRR is the maximum amount of estimation error in the cost of capital estimate that can exist without altering the original decision.
• B)The IRR can provide information on how sensitive your analysis is to errors in the estimate of your cost of capital.
• C)If you are unsure of your cost of capital estimate,it is important to determine how sensitive your analysis is to errors in this estimate.
• D)If the cost of capital estimate is more than the IRR,the NPV will be positive.

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Definitions:

Revenue

The income that a business receives from its normal business activities, usually from the sale of goods and services to customers.

Costs Of Production

The total expenses incurred in manufacturing a product or delivering a service.

Venture Capital Funds

Pools of capital that are used to invest in high-growth, high-potential startup companies in exchange for equity stakes.

Risk

The possibility of loss or adverse outcomes resulting from external events or actions.