Which Statement Best Reflects the Difference Between NPV and IRR

question 97

Multiple Choice

Which statement best reflects the difference between NPV and IRR?

• A) Both NPV and IRR will generate the same decisions.
• B) NPV considers the time value of money, and IRR does not.
• C) NPV is used on one project only and IRR is used when choosing among competing, mutually exclusive projects.
• D) NPV measures profitability in absolute terms, whereas the IRR method measures profitability in relative terms.

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Definitions:

Cartilage

A firm, flexible connective tissue found in various forms in the human body such as joints, rib cage, and ear structure.

Distal End

Referring to the end of a limb or structure that is farthest from the point of attachment or the trunk of the body.

Trachea

The part of the respiratory tract between the larynx and the bronchial tree that is tubular and made of rings of cartilage and smooth muscle; also called the windpipe.

Vocal Cords

Elastic bands of muscle tissue in the larynx involved in producing sound through their vibration as air passes through.