A Limitation of the Internal Rate of Return Method Is

question 151

Multiple Choice

A 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 changes in risk levels over project life.
• E) Failure to compare dissimilar projects.

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Definitions:

Distribution of Sample Means

Describes the dispersion or spread of the means of multiple samples drawn from the same population, often approximated by a normal distribution.

Sampled Population

The subset of individuals from a larger population used in a statistical study.

Standard Error

A measure of the accuracy with which a sample distribution represents a population by using the standard deviation of the sample means.

Sample Size

The number of observations or data points collected in a study or used in a statistical sample.