Which of the following statement about NPV and IRR is not accurate?
AThe IRR is the discount rate that equates the present value of cash inflows with the present value of cash outflowsCorrect AnswerIncorrect Answer
BFor mutually exclusive projects, if the NPV method and IRR method give conflicting rankings, the analyst should use one with the IRR methodCorrect AnswerIncorrect Answer
CThe NPV method assumes that cash flows will be re-invested at the cost of capital, while IRR assumes cash flows are re-invested at IRRCorrect AnswerIncorrect Answer
DNone of the above are falseCorrect AnswerIncorrect Answer
EAll of the above statements are falseCorrect AnswerIncorrect Answer
Solution
When there are conflicting results with NPV and IRR methods, an analyst should go by the one with NPV. All other statements are true
