A Weakness of the Internal Rate of Return (IRR)method Is

question 112

Multiple Choice

A weakness of the internal rate of return (IRR) method is that it

• A)assumes that the cash inflows from the project are immediately reinvested at the minimum required rate of return.
• B)assumes that the cash inflows from the project are immediately reinvested at the internal rate of return.
• C)ignores the time value of money.
• D)does not consider depreciation.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.

Direct Materials

Raw materials that can be directly traced back to the production of specific goods or services.

Standard Costs

Predetermined costs of manufacturing a single unit or a number of units during a specific period under normal conditions.

Expected Price

The anticipated market price of a good, service, or asset, often based on historical trends, current market conditions, and future forecasts.