Question

Which of the following statements about Internal Rate of

Q: Answer-Which of the following statements about Internal Rate of Return (IRR) is incorrect?

IRR and NPV may lead to different decisions especially in mutually exclusive projects or with non-conventional cash flows. NPV is more reliable due to reinvestment at cost of capital assumption.

Return (IRR) is incorrect?

A IRR is the discount rate at which NPV = 0

B Projects with IRR higher than cost of capital are acceptable

C IRR always gives the same result as NPV

D IRR assumes reinvestment at the IRR rate

E IRR may not be unique in non-conventional cash flows

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Which of the following statements about Internal Rate of

Solution