Which of the Following Is a Weakness of the Internal

question 209

Multiple Choice

Which of the following is a weakness of the internal rate of return (IRR) ?

• A)IRR assumes that the cash inflows from the project are immediately reinvested at the minimum required rate of return.
• B)IRR ignores the time value of money.
• C)IRR assumes that the cash inflows from the project are immediately reinvested at the internal rate of return.
• D)IRR is not a percentage rate, but is expressed in dollars.

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Definitions:

Analyze the Situation

The process of examining a scenario or problem in detail to understand its components and implications.

Linear

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Not following a straight, direct, or sequential path, often referring to narratives, processes, or thinking that jumps around in time or topic.

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