Which of the Following Statements Is FALSE

question 29

Multiple Choice

Which of the following statements is FALSE?

• A)The IRR investment rule will identify the correct decision in many,but not all,situations.
• B)By setting the NPV equal to zero and solving for r,we find the IRR.
• 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)The simplest investment rule is the NPV investment rule.

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Definitions:

Exchange Control

Restriction on importation of certain products or against certain companies to reduce trade and expenditures of foreign currency.

Domestic Capital

Financial assets and resources available within a country, including savings and investments, that are used for economic growth.

Foreign Corrupt Practices Act

A U.S. law that prohibits companies from bribing foreign officials to obtain or retain business.

General Agreement

A broadly defined consensus or mutual understanding between parties on a range of issues or terms of engagement.