Which of the Following Is Considered to Be a Deficiency

question 79

Multiple Choice

Which of the following is considered to be a deficiency of the IRR?

• A) It fails to properly rank capital projects.
• B) It could produce more than one rate of return.
• C) It fails to utilize the time value of money.
• D) It is not useful in accounting for risk in capital budgeting.

---

Definitions:

Reference Point

A baseline value or condition used for comparison in decision-making processes.

Risk Aversion

A descriptor for individuals or entities that prefer to minimize exposure to risk and uncertainty, typically opting for safer, more secure investments or choices.

Reference Point

A baseline or standard from which changes are measured, often used in decision-making and behavioral economics.

Consumer Decision

The process by which individuals select goods or services to fulfill their needs and wants.