Which of the Following Statements Is False

question 53

Multiple Choice

Which of the following statements is false?

• A) The incremental IRR investment rule applies the IRR rule to the difference between the cash flows of the two mutually exclusive alternatives.
• B) When a manager must choose among mutually exclusive investments, the NPV rule provides a straightforward answer.
• C) The likelihood of multiple IRRs is greater with the regular IRR rule than with the incremental IRR rule.
• D) Problems can arise using the IRR method when the mutually exclusive investments have differences in scale.

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Definitions:

Economic Events

Transactions and occurrences that affect the financial position of a business entity.

Basic Accounting Equation

Represents the foundation of double-entry bookkeeping, stating that assets equal liabilities plus equity.

Assets

Resources owned by a business that are expected to provide future economic benefits.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.