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

question 31

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:

Accounting System

The system of recording and summarizing business transactions and analyzing, verifying, and reporting the results.

Processing Methods

Various techniques or approaches used in the handling, preparation, or processing of materials or data.

Computerized Accounting System

An accounting information system that processes financial transactions and events as per GAAP (Generally Accepted Accounting Principles) using computer software.

Systems Design

The process of defining the architecture, components, interfaces, and data for a system to satisfy specified requirements.