In Comparing the Internal Rate of Return and Net Present

question 57

Multiple Choice

In comparing the internal rate of return and net present value methods of evaluation, ________.

• A) internal rate of return is theoretically superior, but financial managers prefer net present value
• B) net present value is theoretically superior, but financial managers prefer to use internal rate of return
• C) financial managers prefer net present value, because it is presented as a rate of return
• D) financial managers prefer net present value, because it measures benefits relative to the amount invested

---

Definitions:

Recency

The principle that the most recently presented items or experiences are likely to be remembered best.

Prototype

In person perception, an abstraction that represents the “typical” or quintessential instance of a class or group.

Implicit Personality Theory

A set of unstated assumptions about which personality traits are correlated with one another.

Stereotype

A generalized belief or assumption about the characteristics of a particular group or category of people.