Comparing Net Present Value and Internal Rate of Return

question 43

Multiple Choice

Comparing net present value and internal rate of return

• A) always results in the same ranking of projects.
• B) always results in the same accept/reject decision.
• C) may give different accept/reject decisions.
• D) is only necessary on mutually exclusive projects.

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Definitions:

Market Value

The ongoing pricing level at which a service or asset is offered for buying or selling in the market environment.

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer.

Inventories

Assets held for sale in the ordinary course of business, or in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Net Realizable Value

Net realizable value is the estimated selling price of goods minus the costs of their completion and disposal, used to assess inventory valuation.