Question

Which of the following statement is incorrect? Select one: a. When the internal rate of return...

Which of the following statement is incorrect? Select one:

a. When the internal rate of return is less than this required rate of return, the project is rejected.

b. When NPV equals zero, the required rate of return, or discount rate used in the NPV calculation, is greater than the projected rate of return, IRR.

c. Most of the answers are correct.

d. The number of time periods it takes to cover the initial investment is called the payback period.

e. That number of time periods it takes for the positive cash flows to equal the amount of the initial investment is the payback period.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following statement is correct? Select one: a. Since the payback period method fails...
Which of the following statement is correct? Select one: a. Since the payback period method fails to look at the cash flows beyond the payback period, it can lead to poor business decisions. b. A firm should never accept the independent projects having NPVs greater than zero. c. The capital budgeting projects may be about the purchase of financial asset such as investing in stocks and bonds, futures, or buying and selling T-bills. d. The number of time periods it...
Which of the following statements about internal rate of return (IRR) is false? explain why IRR...
Which of the following statements about internal rate of return (IRR) is false? explain why IRR is the discount rate at which the present value of future expected cash flows is exactly equal to the initial investment. The IRR rule always leads to the same decision as the NPV rule. IRR is the discount rate at which a project's NPV equals zero.
Which of the following statement is correct? Select one: a. All the answers are incorrect. b....
Which of the following statement is correct? Select one: a. All the answers are incorrect. b. A positive NPV means that the firm’s value will decrease if the project is adopted because the new project’s estimated return is lesst than the firm’s required rate of return. c. Reject the project if the IRR is greater than or equal to the required rate of return. d. Payback period is the discount rate that forces the NPV to equal zero. e. All...
11. The discount rate that makes the net present value of an investment exactly equal to...
11. The discount rate that makes the net present value of an investment exactly equal to zero is the: A) Payback period. B) Internal rate of return. C) Average accounting return. D) Profitability index. E) Discounted payback period. 12. The internal rate of return (IRR) rule can be best stated as: A) An investment is acceptable if its IRR is exactly equal to its net present value (NPV). B) An investment is acceptable if its IRR is exactly equal to...
Which one of the following statements about inflation is correct? A. The real rate of return...
Which one of the following statements about inflation is correct? A. The real rate of return accurately indicates how an investment opportunity will change the investor's purchasing power. B. The greater the inflation rate is, the stronger the purchasing power of a currency becomes. C. Deflation is highly desired because it immediately stimulates consumption in an economy. D. When the expected inflation increases, the nominal interest rates decline. Which of the following statements about capital budgeting tools are correct? I....
1(a). (TRUE or FALSE?) We calculate the payback period for a proposed project by adding a...
1(a). (TRUE or FALSE?) We calculate the payback period for a proposed project by adding a project’s positive cash flows, one period at a time, until the sum equals the initial investment. 1(b). (TRUE or FALSE?) When evaluating proposed projects with the IRR method, those projects with IRRs that are greater than the required rate of return are rejected. 1(c). (TRUE or FALSE?) If the project’s IRR is greater than or equal to the hurdle rate (discount rate), the project...
Internal Rate of Return Method The internal rate of return (IRR) method uses present value concepts...
Internal Rate of Return Method The internal rate of return (IRR) method uses present value concepts to compute the rate of return from a capital investment proposal based on its expected net cash flows. This method, sometimes called the time-adjusted rate of return method, starts with the proposal's net cash flows and works backward to estimate the proposal's expected rate of return. Let's look at an example of internal rate of return calculation with even cash flows. A company has...
Which of the following statements defines the internal rate of return (IRR) for a project? A....
Which of the following statements defines the internal rate of return (IRR) for a project? A. Discount rate which results in a zero NPV B. Discount rate which results in a NPV equal to the project's initial cost C. Rate of return required by the project's investors D. The current market rate of return for projects of similar risk
Which of the following statements is true? Group of answer choices The payback investment rule is...
Which of the following statements is true? Group of answer choices The payback investment rule is based on the notion that an opportunity that pays back its initial investments quickly is not a good idea An internal rate of return (IRR) can’t be a negative number for an investment opportunity. Net present value (NPV) always is less reliable than IRR for an investment opportunity. In general, there can be as many internal rates of return (IRRs) as the number of...
Question text Which of the following statements is INCORRECT? Select one: a. When choosing between mutually...
Question text Which of the following statements is INCORRECT? Select one: a. When choosing between mutually exclusive projects, managers should accept all projects with IRRs greater than the weighted average cost of capital. b. For independent projects, the decision to accept or reject will always be the same using either the MIRR method or the NPV method. c. One of the disadvantages of choosing between mutually exclusive projects on the basis of discounted payback method is that you might choose...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT