Which of the Following Statements Is False

question 91

Multiple Choice

Which of the following statements is false?

• A) Multiple IRRs result when a project's cash flows alternate between negative and positive values.
• B) If a project has multiple IRRs its NPV profile will cross the x-axis more than once.
• C) The general rule of thumb is that a project will have as many IRRs are there are negative cash flows.
• D) There are occasions when a project's IRR may involve imaginary numbers.
• E) All of the above statements are true.

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Definitions:

Marginal Revenue

The revenue increase resulting from the sale of an extra unit of a good or service.

Monopolistically Competitive

A market structure in which several or many sellers each produce similar, but slightly differentiated products; competition is based on product differentiation, prices, and marketing.

Monopolistically Competitive

A market structure characterized by many firms selling products that are substitutes but not perfect substitutes, leading to some degree of market power for each firm.

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, and loan repayments.