Which of the Following Statements Is FALSE

question 34

Multiple Choice

Which of the following statements is FALSE?

• A) In general, the difference between the cost of capital and the internal rate of return (IRR) is the maximum amount of estimation error in the cost of capital estimate that can exist without altering the original decision.
• B) The internal rate of return (IRR) can provide information on how sensitive your analysis is to errors in the estimate of your cost of capital.
• C) If you are unsure of your cost of capital estimate, it is important to determine how sensitive your analysis is to errors in this estimate.
• D) If the cost of capital estimate is more than the internal rate of return (IRR), the net present value (NPV) will be positive.

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Definitions:

Situational Causes

External environmental factors or conditions that influence an individual's behavior or outcomes, as opposed to intrinsic or internal factors.

Personal Causes

Factors or reasons stemming from individual characteristics or actions that lead to a specific effect or outcome.

Out-group Bias

The tendency to have negative perceptions or feelings towards individuals who are not considered part of one's own group, leading to prejudice and discrimination.

Favorable Qualities

Attributes or traits of an individual, group, or object that are viewed positively or considered beneficial within a certain context.