Which of the Following Statements Is FALSE

question 34

Multiple Choice

Which of the following statements is FALSE?

• A) In general, the difference between the cost of capital and the internal rate of return (IRR) is the maximum amount of estimation error in the cost of capital estimate that can exist without altering the original decision.
• B) The internal rate of return (IRR) can provide information on how sensitive your analysis is to errors in the estimate of your cost of capital.
• C) If you are unsure of your cost of capital estimate, it is important to determine how sensitive your analysis is to errors in this estimate.
• D) If the cost of capital estimate is more than the internal rate of return (IRR), the net present value (NPV) will be positive.

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Definitions:

Memoranda

Written messages or notes used for internal communication within organizations or between individuals in a professional context.

Secretary

An administrative assistant in an organization who is responsible for handling correspondence, keeping records, and performing clerical duties.

Timber Wolves

Large members of the canine family native to North America and Eurasia, known for their social nature, forming packs to hunt and live.

Western Europe

A region comprising the western part of Europe, known for its distinct historical, cultural, and economic attributes.