Select the Incorrect Statement Concerning the Internal Rate of Return

question 2

Multiple Choice

Select the incorrect statement concerning the internal rate of return (IRR) method of evaluating capital projects.

• A) The higher the IRR the better.
• B) The internal rate of return is that rate that makes the present value of the initial outlay equal to zero.
• C) If a project has a positive net present value then its IRR will exceed the hurdle rate.
• D) A project whose IRR is less than the cost of capital should be rejected.

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Definitions:

Development

The process of growth or progression through a sequence of stages, such as physical, psychological, or social development.

Societies

Groups of individuals living together in organized communities with shared laws, traditions, and values.

Fat-to-muscle Ratio

A measure of body composition that compares the amount of fat mass to muscle mass in an individual's body.

Metabolizes

The process by which a living organism takes in and transforms substances to produce energy, maintain its functions, and dispose of wastes.