Which of the Following Statements Concerning the Internal Rate of Return

question 57

Multiple Choice

Which of the following statements concerning the internal rate of return method of capital decision making is not correct?

• A) The IRR is the rate of return that discounts the cash flows of a project so that the present value of the cash inflows just equals the present value of the cash outflows.
• B) It takes into account the scale of projects.
• C) It is used to find the rate of return of the project.
• D) Its decision rule is to accept projects that have an IRR that is higher than the hurdle rate.