Which of the following statements is (or are) true? (Select all correct responses.] O For a borrowing (or "delayed investment" project), the internal rate of return (IRR) decision rule states that if the IRR exceeds the benchmark rate, accept the project. O For an investment, the IRR decision rule states that if the IRR exceeds the benchmark rate, accept the project. NPV should never be used if the project under consideration has nonconventional cash flows. O A decision maker who is considering several mutually exclusive investment opportunities should use IRR to choose the best one among them. The payback investment rule might not use all possible cash flows in its calculation. In some instances, for example for mutually exclusive investments, the NPV rule is not as conceptually legitimate as is the payback rule. O Practitioners generally prefer the payback decision criterion to the IRR because payback considers the time value of money while IRR does not. O The main weakness of the NPV decision criterion is that it ignores distant cash flows.
Which of the following statements is (or are) true? (Select all correct responses.] O For a borrowing (or "delayed investment" project), the internal rate of return (IRR) decision rule states that if the IRR exceeds the benchmark rate, accept the project. O For an investment, the IRR decision rule states that if the IRR exceeds the benchmark rate, accept the project. NPV should never be used if the project under consideration has nonconventional cash flows. O A decision maker who is considering several mutually exclusive investment opportunities should use IRR to choose the best one among them. The payback investment rule might not use all possible cash flows in its calculation. In some instances, for example for mutually exclusive investments, the NPV rule is not as conceptually legitimate as is the payback rule. O Practitioners generally prefer the payback decision criterion to the IRR because payback considers the time value of money while IRR does not. O The main weakness of the NPV decision criterion is that it ignores distant cash flows.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Question 10
2 pts
Which of the following statements is (or are) true?
[Select all correct responses.]
O For a borrowing (or "delayed investment" project), the internal rate of return (IRR) decision rule states that if
the IRR exceeds the benchmark rate, accept the project.
O For an investment, the IRR decision rule states that if the IRR exceeds the benchmark rate, accept the
project.
O NPV should never be used if the project under consideration has nonconventional cash flows.
D A decision maker who is considering several mutually exclusive investment opportunities should use IRR to
choose the best one among them.
O The payback investment rule might not use all possible cash flows in its calculation.
O In some instances, for example for mutually exclusive investments, the NPV rule is not as conceptually
legitimate as is the payback rule.
Practitioners generally prefer the payback decision criterion to the IRR because payback considers the time
value of money while IRR does not.
The main weakness of the NPV decision criterion is that it ignores distant cash flows.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcbc4e88d-c71d-46d8-9542-9763c735a8d9%2Fd78d9760-8fb0-466e-a4cc-c7a757f808e3%2Fepy5vbt_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 10
2 pts
Which of the following statements is (or are) true?
[Select all correct responses.]
O For a borrowing (or "delayed investment" project), the internal rate of return (IRR) decision rule states that if
the IRR exceeds the benchmark rate, accept the project.
O For an investment, the IRR decision rule states that if the IRR exceeds the benchmark rate, accept the
project.
O NPV should never be used if the project under consideration has nonconventional cash flows.
D A decision maker who is considering several mutually exclusive investment opportunities should use IRR to
choose the best one among them.
O The payback investment rule might not use all possible cash flows in its calculation.
O In some instances, for example for mutually exclusive investments, the NPV rule is not as conceptually
legitimate as is the payback rule.
Practitioners generally prefer the payback decision criterion to the IRR because payback considers the time
value of money while IRR does not.
The main weakness of the NPV decision criterion is that it ignores distant cash flows.
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