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

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Definitions:

Independent Variable

The variable in an experiment that is manipulated to see if it causes an effect on some other variable.

Room Color

The influence of paint or decoration hues in a room on mood, behavior, and cognitive performance.

Double-Blind Experiment

A scientific experiment setup where neither the participants nor the experimenters know which participants are receiving the test treatment, to prevent bias.

Independent Variable

The condition or factor that is manipulated by a researcher to determine its effect on a dependent variable in an experiment.