A Major Limitation of the Internal Rate of Return Method

question 115

Multiple Choice

A major limitation of the internal rate of return method is:

• A) Failure to measure time value of money.
• B) Failure to measure results as a percent.
• C) Failure to consider the payback period.
• D) Failure to reflect varying risk levels over project life.
• E) Failure to compare dissimilar projects.

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Definitions:

Dollar Markup

The difference between the cost of a product and its selling price, expressed in dollar terms.

Dealer's Cost

The actual cost to a dealer for the products they sell, often excluding additional expenses like marketing or transport.

Pneumatic Roofing Stapler

A tool powered by compressed air used to drive staples into roofing materials for secure attachment.

Markup Percent

The rate at which a merchandise's price is elevated to set its market selling price.