On a Purely Theoretical Basis, IRR Is the Better Approach

question 58

True/False

On a purely theoretical basis, IRR is the better approach to capital budgeting than NPV because IRR implicitly assumes that any intermediate cash inflows generated by an investment are reinvested at the firm's cost of capital.

---

Definitions:

Accountability Pressures

The demand or expectation from stakeholders to justify actions or decisions and take responsibility for outcomes.

Negotiator's Power

The influence or authority a negotiator possesses to affect the outcome of negotiations.

Senior Person

An individual holding a higher-level position or rank within an organization or group.

Special Role

A unique or specific function that an entity, individual, or group is expected to perform within a certain context.