Which of the Following Statements Is CORRECT

question 29

Multiple Choice

Which of the following statements is CORRECT?

• A) One advantage of the NPV over the IRR is that NPV assumes that cash flows will be reinvested at the WACC, whereas IRR assumes that cash flows are reinvested at the IRR.The NPV assumption is generally more appropriate.
• B) One advantage of the NPV over the MIRR method is that NPV takes account of cash flows over a project's full life whereas MIRR does not.
• C) One advantage of the NPV over the MIRR method is that NPV discounts cash flows whereas the MIRR is based on undiscounted cash flows.
• D) Since cash flows under the IRR and MIRR are both discounted at the same rate (the WACC), these two methods always rank mutually exclusive projects in the same order.
• E) One advantage of the NPV over the IRR is that NPV takes account of cash flows over a project's full life whereas IRR does not.

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Definitions:

M/M/1 Assumptions

Assumptions used in queueing theory for a single-server queue, including exponential service times and arrivals being a Poisson process.

Average Number

Denotes the numerical value found by dividing the sum of all values in a set by the count of values in the set.

μ

The sign typically utilized to denote the average or mean in math and statistical analysis.

Poisson Distribution

A numerical distribution detailing the probability of specific event counts happening over a determined timeframe or spatial range.