What Is the Main Disadvantage of the Internal Rate of Return

question 47

Multiple Choice

What is the main disadvantage of the Internal Rate of Return method?

• A)it ignores the scale of projects, which could lead to wrong decision-making.
• B)it is difficult for management to incorporate it into decision-making.
• C)it is too simplistic.
• D)all of the above.

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Definitions:

Going Private

The process by which a publicly traded company is transformed into a privately held entity.

Hostile Takeover

A takeover to which the management of the target corporation objects.

Leveraged Buyout

The acquisition of a company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition.

Self-tender Offer

A situation where a company offers to buy back its own shares from shareholders, usually at a premium over the current market price.