Which of the Following Statements Is False

question 68

Multiple Choice

Which of the following statements is false?

• A) When using the incremental IRR rule, you must keep track of which project is the incremental project and ensure that the incremental cash flows are initially positive and then become negative.
• B) Picking one project over another simply because it has a larger IRR can lead to mistakes.
• C) Problems arise using the IRR method when the mutually exclusive investments have differences in scale.
• D) When the risks of two projects are different, only the NPV rule will give a reliable answer.

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Definitions:

Weekly Payments

Regular payments made on a weekly basis, often used in terms of loan repayment schedules or employment salaries.

Stated Rate

The annual interest rate declared on a financial instrument, such as a bond, without accounting for compounding within the year.

Rate Of Return

The accrual or diminishment of value in an investment over a specific epoch, visualized as a percentage of the investment’s inaugural cost.

Savings Account

A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.