Which of the Following Statements Is CORRECT

question 40

Multiple Choice

Which of the following statements is CORRECT?

• A) The MIRR and NPV decision criteria can never conflict.
• B) The IRR method can never be subject to the multiple IRR problem,while the MIRR method can be.
• C) One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption.
• D) The higher the WACC,the shorter the discounted payback period.
• E) The MIRR method assumes that cash flows are reinvested at the crossover rate.

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Expenditures

Money spent by an organization or individual for goods, services, or other purposes.

Policies

Guiding principles or rules designed to steer decisions and actions in an organization.

Broad Guidelines

General rules or principles that provide direction or advice on how to act in specific situations, without being overly detailed.