Which of the Following Is a Weakness of the Internal

question 104

Multiple Choice

Which of the following is a weakness of the internal rate of return method for screening investment projects?

• A) It does NOT consider the time value of money.
• B) It implicitly assumes that the company is able to reinvest cash flows from the project at the company's discount rate.
• C) It implicitly assumes that the company is able to reinvest cash flows from the project at the internal rate of return.
• D) It does NOT take into account all of the cash flows from a project.

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Definitions:

Predictable Structure

An organizational or systemic setup whose outcomes or behaviors can be anticipated based on known parameters or historical data.

Information Technology

The employment of computers, storage systems, networking, and other tangible tools, infrastructure, and procedures for generating, processing, storing, safeguarding, and sharing all types of electronic information.

Strategic Resource

A valuable asset or capability that gives an organization a competitive advantage in its market or industry.

Racially Diverse

Describes a group or setting that includes individuals of multiple races and ethnic backgrounds.