Which of the following statements is correct regarding the internal rate of return (IRR) method? A. Each project has a unique internal rate of return B. As long as you are not dealing with mutually exclusive projects, capital rationing, or unusual projects having multiple sigD. The internal rate of return is rarely used by firms today because of the ease at which net present value is calculatedn changes in the cash-flow stream, the internal rate of return method can be used with reasonable confidence. C. The internal rate of return does not consider the time value of money.

Which of the following statements is correct regarding the internal rate of return (IRR)

method?

A. Each project has a unique internal rate of return

B. As long as you are not dealing with mutually exclusive projects, capital rationing,

or unusual projects having multiple sign changes in the cash-flow stream, the

internal rate of return method can be used with reasonable confidence.

C. The internal rate of return does not consider the time value of money.

D. The internal rate of return is rarely used by firms today because of the ease at

which net present value is calculated
by

1 Answer

Answer :

D. The internal rate of return is rarely used by firms today because of the ease at

which net present value is calculated.
by

Related questions

Which of the following statements is correct regarding the internal rate of return (IRR) method? A. Each project has a unique internal rate of return. B. As long as you are not dealing with mutually exclusive projects, capital rationing, or unusual projects having multiple sign changes in the cash-flow stream, the internal rate of return method can be used with reasonable confidence. C. The internal rate of return does not consider the time value of money. D. The internal rate of return is rarely used by firms today because of the ease at which net present value is calculated

Description : Which of the following statements is correct regarding the internal rate of return (IRR) method? A. Each project has a unique internal rate of return. B. As long as you are not dealing with ... of return is rarely used by firms today because of the ease at which net present value is calculated

Last Answer : D. The internal rate of return is rarely used by firms today because of the ease at which net present value is calculated.

Which of the following statements is correct regarding the internal rate of return (IRR) method? A. Each project has a unique internal rate of return. B. As long as you are not dealing with mutually exclusive projects, capital rationing, or unusual projects having multiple sign changes in the cash-flow stream, the internal rate of return method can be used with reasonable confidence. C. The internal rate of return does not consider the time value of money. D. The internal rate of return is rarely used by firms today because of the ease at which net present value is calculated.

Description : Which of the following statements is correct regarding the internal rate of return (IRR) method? A. Each project has a unique internal rate of return. B. As long as you are not dealing with ... of return is rarely used by firms today because of the ease at which net present value is calculated.

Last Answer : D. The internal rate of return is rarely used by firms today because of the ease at which net present value is calculated.

When operating under a single-period capital-rationing constraint, you may first want to try selecting projects by descending order of their in order to give yourself the best chance to select the mix of projects that adds most to firm value. A. profitability index (PI) B. net present value (NPV) C. internal rate of return (IRR) D. payback period (PBP)

Description : When operating under a single-period capital-rationing constraint, you may first want to try selecting projects by descending order of their in order to give yourself the best chance to select the mix of ... net present value (NPV) C. internal rate of return (IRR) D. payback period (PBP)

Last Answer : B. net present value (NPV)

When operating under a single-period capital-rationing constraint, you may first want to try selecting projects by descending order of their in order to give yourself the best chance to select the mix of projects that adds most to firm value. A. profitability index (PI) B. net present value (NPV) C. internal rate of return (IRR) D. payback period (PBP)

Description : When operating under a single-period capital-rationing constraint, you may first want to try selecting projects by descending order of their in order to give yourself the best chance to select the mix of ... net present value (NPV) C. internal rate of return (IRR) D. payback period (PBP)

Last Answer : B. net present value (NPV)

Which of the following statements is incorrect regarding a normal project? A. If the NPV of a project is greater than 0, then its PI will exceed 1. B. If the IRR of a project is 8%, its NPV, using a discount rate, k, greater than 8%, will be less than 0.C. If the PI of a project equals 0, then the project's initial cash outflow equals the PV of its cash flows. D. If the IRR of a project is greater than the discount rate, k, then its PI will be greater than 1.

Description : Which of the following statements is incorrect regarding a normal project? A. If the NPV of a project is greater than 0, then its PI will exceed 1. B. If the IRR of a project is 8%, its NPV, using ... the IRR of a project is greater than the discount rate, k, then its PI will be greater than 1.

Last Answer : D. If the IRR of a project is greater than the discount rate, k, then its PI will be greater than 1.

A project has the following cash inflows Rs.34,444; Rs.39,877; Rs.25,000; and Rs.52,800 for years 1 through 4, respectively. The initial cash outflow is Rs.104,000. Which of the following four statements is correct concerning the project internal rate of return (IRR)? A. The IRR is less than 10%. B. The IRR is greater than or equal to 10%, but less than 14%. C. The IRR is greater than or equal to 14%, but less than 18%. D. The IRR is greater than or equal to 18%.

Description : A project has the following cash inflows Rs.34,444; Rs.39,877; Rs.25,000; and Rs.52,800 for years 1 through 4, respectively. The initial cash outflow is Rs.104,000. Which of the following four statements ... than or equal to 14%, but less than 18%. D. The IRR is greater than or equal to 18%.

Last Answer : C. The IRR is greater than or equal to 14%, but less than 18%.

Which of the following is true? A. Discounted cash flow analysis is the least precise of the cash flow techniques, because it does not consider the time value of money. B. NPV is the least precise of the cash flow analysis techniques, because it assumes reinvestment at the discount rate. C. Payback period is the least precise of the cash flow analysis techniques, because it does not consider the time value of money. D. IRR is the least precise of the cash flow analysis techniques, because it assumes reinvestment at the cost of capital.

Description : Which of the following is true?  A. Discounted cash flow analysis is the least precise of the cash flow techniques, because  it does not consider the time value of money. B. NPV is ... least precise of the cash flow analysis techniques, because it assumes  reinvestment at the cost of capital.

Last Answer : C. Payback period is the least precise of the cash flow analysis techniques, because it  does not consider the time value of money.

Which of the following is not a potential for a ranking problem between two mutua lly exclusive projects? A. The projects have unequal lives that differ by several years. B. The costs of the two projects differ by nearly 30%. C. The two projects have cash flow patterns that differ dramatically. D. One of the mutually exclusive projects involves replacement while the other involves expansion.

Description : Which of the following is not a potential for a ranking problem between two mutua lly exclusive projects? A. The projects have unequal lives that differ by several years. B. The ... dramatically. D. One of the mutually exclusive projects involves replacement while the other involves expansion.

Last Answer : A. The projects have unequal lives that differ by several years.

Which of the following is not a potential for a ranking problem between two mutua lly exclusive projects? A. The projects have unequal lives that differ by several years. B. The costs of the two projects differ by nearly 30%. C. The two projects have cash flow patterns that differ dramatically. D. One of the mutually exclusive projects involves replacement while the other involves expansion

Description : Which of the following is not a potential for a ranking problem between two mutua lly exclusive projects? A. The projects have unequal lives that differ by several years. B. The ... dramatically. D. One of the mutually exclusive projects involves replacement while the other involves expansion

Last Answer : A. The projects have unequal lives that differ by several years

Which of the following is not a potential for a ranking problem between two mutua lly exclusive projects? A. The projects have unequal lives that differ by several years B. The costs of the two projects differ by nearly 30%. C. The two projects have cash flow patterns that differ dramatically D. One of the mutually exclusive projects involves replacement while the other involves expansion

Description : Which of the following is not a potential for a ranking problem between two mutua lly exclusive projects? A. The projects have unequal lives that differ by several years B. The ... dramatically D. One of the mutually exclusive projects involves replacement while the other involves expansion

Last Answer : A. The projects have unequal lives that differ by several years

A project whose acceptance requires the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project B. an independent project C. a dependent projectD. None of the above

Description : A project whose acceptance requires the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project B. an independent project C. a dependent project D. None of the above

Last Answer : B. an independent project

A project whose acceptance precludes the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project. D. a contingent project.

Description : A project whose acceptance precludes the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project. D. a contingent project.

Last Answer : A. a mutually exclusive project.

A project whose acceptance requires the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project D. a contingent project E. none of the above

Description : A project whose acceptance requires the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project D. a contingent project E. none of the above

Last Answer : A. a mutually exclusive project.

A project whose acceptance precludes the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project D. a contingent project

Description : A project whose acceptance precludes the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project D. a contingent project

Last Answer : C. a dependent project

A project whose acceptance requires the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project D. a contingent project E. none of the above

Description : A project whose acceptance requires the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project D. a contingent project E. none of the above

Last Answer : A. a mutually exclusive project.

A project whose acceptance precludes the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project D. a contingent project

Description : A project whose acceptance precludes the acceptance of one or more alternative projects is referred to as . A. a mutually exclusive project. B. an independent project. C. a dependent project D. a contingent project

Last Answer : C. a dependent project

Which of the following statements regarding cash flow patterns (for time periods 0, 1, 2, 3, and 4) is correct? A. The sequence of -Rs.100, Rs.50, Rs.40, Rs.60, and Rs.50 is a non-conventional cash flow pattern B. The sequence of -Rs.100, Rs.600, -Rs.1,100, Rs.600, and Rs.20 potentially has a maximum of two internal rates of return. C. The sequence of +Rs.100, -Rs.1,100, and Rs.1,600 is a conventional cash flow pattern. D. The sequence of -Rs.50, Rs.50, Rs.70, Rs.60, and -Rs.150 potentially has at most two internal rates of return.

Description : Which of the following statements regarding cash flow patterns (for time periods 0, 1, 2, 3, and 4) is correct? A. The sequence of -Rs.100, Rs.50, Rs.40, Rs.60, and Rs.50 is a non-conventional cash ... -Rs.50, Rs.50, Rs.70, Rs.60, and -Rs.150 potentially has at most two internal rates of return.

Last Answer : B. The sequence of -Rs.100, Rs.600, -Rs.1,100, Rs.600, and Rs.20 potentially has a maximum of two internal rates of return.

Which of the following is true regarding IRR?A. IRR assumes reinvestment at the cost of capital. B. IRR is the discount rate when NPV is greater than zero. C. IRR is a constrained optimization method. D. IRR is the discount rate when NPV is equal to zero.

Description : Which of the following is true regarding IRR? A. IRR assumes reinvestment at the cost of capital. B. IRR is the discount rate when NPV is greater than zero. C. IRR is a constrained optimization method. D. IRR is the discount rate when NPV is equal to zero.

Last Answer : D. IRR is the discount rate when NPV is equal to zero.

To the nearest rupee, what is the net present value of a replacement project whose cash flows are -Rs.104,000; Rs.34,444; Rs.39,877; Rs.25,000; and Rs.52,800 for years 0 through 4, respectively? The firm has decided to assume that the appropriate cost of capital is 10% and the appropriate risk-free rate is 6%. A. Rs.15,115 B. Rs.26,798 C. Rs.33,346 D. Rs.48,121

Description : To the nearest rupee, what is the net present value of a replacement project whose cash flows are -Rs.104,000; Rs.34,444; Rs.39,877; Rs.25,000; and Rs.52,800 for years 0 through 4, respectively? The firm has decided to ... -free rate is 6%. A. Rs.15,115 B. Rs.26,798 C. Rs.33,346 D. Rs.48,121

Last Answer : C. Rs.33,346

There are two income-based approaches that are primarily used when valuing a business, the Capitalization of Cash Flow Method and the ___________. a) Net Present Value Method b) IRR Method c) Discounted Cash Flow Method d) Discounted Payback Period

Description : There are two income-based approaches that are primarily used when valuing a business, the Capitalization of Cash Flow Method and the ___________. a) Net Present Value Method b) IRR Method c) Discounted Cash Flow Method d) Discounted Payback Period

Last Answer : c) Discounted Cash Flow Method

Which of the following is least likely to be part of the calculation of the terminal- year incremental net cash flow for an energy-related expansion project? A. An initial working capital investment is now returned as an additional cash inflow B. Disposal/reclamation costs C. Capitalized expenditures D. Salvage value of any sold or disposed assets

Description : Which of the following is least likely to be part of the calculation of the terminal- year incremental net cash flow for an energy-related expansion project? A. An initial working capital ... Disposal/reclamation costs C. Capitalized expenditures D. Salvage value of any sold or disposed assets

Last Answer : D. Salvage value of any sold or disposed assets

A profitability index (PI) of .92 for a project means that . A. The project's costs (cash outlay) are (is) less than the present value of the project's benefits B. The project's NPV is greater than zero C. The project's NPV is greater than 1 D. The project returns 92 cents in present value for each current rupee invested (cost)

Description : A profitability index (PI) of .92 for a project means that . A. The project's costs (cash outlay) are (is) less than the present value of the project's benefits B. The project's NPV is ... is greater than 1 D. The project returns 92 cents in present value for each current rupee invested (cost)

Last Answer : C. The project's NPV is greater than 1

Which method does not consider the time value of money A. Net present value B. Internal Rate of Return C. Average rate of return D. Profitability Index

Description : Which method does not consider the time value of money A. Net present value B. Internal Rate of Return C. Average rate of return D. Profitability Index

Last Answer : C. Average rate of return

The estimated benefits from a capital budgeting project are expected as cash flows rather than income flows because . A. it is more difficult to calculate income flows than cash flows B. it is cash, not accounting income, that is central to the firm's capital budgeting decision C. this is required by the accounting profession

Description : The estimated benefits from a capital budgeting project are expected as cash flows rather than income flows because . A. it is more difficult to calculate income flows than cash flows B. it ... is central to the firm's capital budgeting decision C. this is required by the accounting profession

Last Answer : B. it is cash, not accounting income, that is central to the firm's capital budgeting decision

_________ method for profitability evaluation of a project does not account for investment cost due to land. (A) Net present worth (B) Pay out period (C) Discounted cash flow (D) Rate of return on investment

Description : _________ method for profitability evaluation of a project does not account for investment cost due to land. (A) Net present worth (B) Pay out period (C) Discounted cash flow (D) Rate of return on investment

Last Answer : (B) Pay out period

_____________ may be defined as the excess of present value of project cash inflows over that of out flows. A. Net present value technique. B. Average rate of return. C. Benefit-Cost ratio. D. Internal rate of return

Description : _____________ may be defined as the excess of present value of project cash inflows over that of out flows. A. Net present value technique. B. Average rate of return. C. Benefit-Cost ratio. D. Internal rate of return

Last Answer : A. Net present value technique.

Which of the following is not used in capital budgeting? A. B. C. D. Time Value of Money Sensitivity Analysis Net Assets Value Method Cash Flows

Description : Which of the following is not used in capital budgeting? A. B. C. D. Time Value of Money Sensitivity Analysis Net Assets Value Method Cash Flows

Last Answer : Net Assets Value Method

A Firm is considering undertaking a project that would yield annual profits (after depreciation) of Rs 68,000 for 5 years. The initial outlay of the project would be Rs 800,000 and the project's assets would have a residual value of Rs 50,000 at the end of the project. What would be the accounting rate of return for this project? A 16% B 8.5% C 8.0% D 9.1%

Description : A Firm is considering undertaking a project that would yield annual profits (after  depreciation) of Rs 68,000 for 5 years. The initial outlay of the project would be Rs  800,000 and the project's assets would have ... accounting rate of return for this project?  A 16%  B 8.5%  C 8.0%  D 9.1%

Last Answer : A 16%

A firm is about to undertake a project and has compu10% 130 15% 50 20% -50 What is the approximate IRR of this project? A 20% B 17.5% C 15% D 22.5%ted the NPV of the project using a variety of discount rates: Discount Rate used NPV

Description : A firm is about to undertake a project and has computed the NPV of the project using a variety of discount rates:  Discount Rate used NPV 10% 130  15% 50  20% -50  What is the approximate IRR of this project?  A 20%  B 17.5%  C 15%  D 22.5%

Last Answer : B 17.5%

A project has a Profitability Index of 1.30. What does it mean? A.The NPV is less than zero B.The payback period is more than one year C.That the project returns Rs 1.30 for every Re 1 invested in the project D.That IRR is 1.30 times that of the Hurdle Rate

Description : A project has a Profitability Index of 1.30. What does it mean?  A.The NPV is less than zero B.The payback period is more than one year  C.That the project returns Rs 1.30 for every Re 1 invested in the project  D.That IRR is 1.30 times that of the Hurdle Rate

Last Answer : C.That the project returns Rs 1.30 for every Re 1 invested in the project

In case of the indivisible projects, which of the following may not give the optimum result? A. Internal Rate of Return B. Profitability Index C. Feasibility Set Approach D. All of the above

Description : In case of the indivisible projects, which of the following may not give the optimum result? A. Internal Rate of Return B. Profitability Index C. Feasibility Set Approach D. All of the above

Last Answer : C. Feasibility Set Approach

Which of the following statements is true regarding contracts? Select one: a. They are the filters through which project members screen information that is shared. b. They do not lend themselves to create an environment of trust. c. The success of larger, more complex projects is more dependent on contracts than on relationships of trust. d. Without contracts, projects that are highly dependent on an information-rich environment will suffer. e. Contracts promote the growth of a trusting project culture.

Description : Which of the following statements is true regarding contracts? Select one: a. They are the filters through which project members screen information that is shared. b. They do not lend ... information-rich  environment will suffer. e. Contracts promote the growth of a trusting project culture.

Last Answer : b. They do not lend themselves to create an environment of trust.

One of the greatest weaknesses of systems consulting firms is that they try to apply estimates and methodologies that they have developed over time and applied to other projects, most of which are very different from the current project.

Description : One of the greatest weaknesses of systems consulting firms is that they try to apply  estimates and methodologies that they have developed over time and applied to other  projects, most of which are very different from the current project.

Last Answer : Ans: False

. It is not wise to identify tasks for a current project using existing methodology, because methodologies that have been used by an organization for other projects probably will not work for this project without extensive changes.

Description : . It is not wise to identify tasks for a current project using existing methodology,  because methodologies that have been used by an organization for other projects probably will not work for this project without extensive changes.

Last Answer : Ans: False

Having defined working capital as current assets, it can be further classified according to . A. financing method and time B. rate of return and financing method C. time and rate of return D. components & time

Description : Having defined working capital as current assets, it can be further classified according to  . A. financing method and time B. rate of return and financing method C. time and rate of return D. components & time

Last Answer : D. components & time

Which of the following statements is not correct? A. For the purpose of Funds Flow Statement, the term 'fund ' generally refers to net working capital B. Funds flow is a wider concept than the Cash flow C. The flow of funds must arise due to external and not internal transactions of the business D. The capitalisation of reserves by the issue of bonus shares also involves flow of funds

Description : Which of the following statements is not correct? A. For the purpose of Funds Flow Statement, the term 'fund ' generally refers to net working capital B. Funds flow is a wider concept than ... business D. The capitalisation of reserves by the issue of bonus shares also involves flow of funds

Last Answer : D. The capitalisation of reserves by the issue of bonus shares also involves flow of funds

The amount of current assets required to meet a firm's long-term minimum needs is referred to as working capital. A. permanent B. temporary C. net D. gross

Description : The amount of current assets required to meet a firm's long-term minimum needs is  referred to as working capital. A. permanent B. temporary C. net D. gross

Last Answer : A. permanent

Which one of the following pricing objectives is rarely operational because its achievement is difficult to measure? A)Return on investment B)Cash flow C)Profit maximisation D)Market share E)Survival

Description : Which one of the following pricing objectives is rarely operational because its achievement is difficult to measure? A)Return on investment B)Cash flow C)Profit maximisation D)Market share E)Survival

Last Answer : C)Profit maximisation

Which of the following does not affect cash flows from a proposal: A. Salvage value B. Depreciation amount C. Tax rate change D. Method of project financing

Description : Which of the following does not affect cash flows from a proposal: A. Salvage value B. Depreciation amount C. Tax rate change D. Method of project financing

Last Answer : D. Method of project financing

Which one of the following statements best describes a project? a. A project is a set of tools and techniques often used when delivering organisational change. b. A project is the sum of activities needed to remove uncertainty from a unique piece of work. c. A unique transient endeavor undertaken to achieve a desired outcome. d. A project is a method of planning work.

Description : Which one of the following statements best describes a project? a. A project is a set of tools and techniques often used when delivering organisational change. b. A project is the sum of activities ... endeavor undertaken to achieve a desired outcome. d. A project is a method of planning work.

Last Answer : c. A unique transient endeavor undertaken to achieve a desired outcome.

Which one of the following statements best describes a project? a. A project is a set of tools and techniques often used when delivering organisational change. b. A project is the sum of activities needed to remove uncertainty from a unique piece of work. c. A unique transient endeavour undertaken to achieve a desired outcome. d. A project is a method of planning work.

Description : Which one of the following statements best describes a project?  a. A project is a set of tools and techniques often used when delivering organisational change.  b. A project is the sum of ... endeavour undertaken to achieve a desired outcome.  d. A project is a method of planning work.

Last Answer : c. A unique transient endeavour undertaken to achieve a desired outcome.

Discounted cash flow criteria for investment appraisal does not include A. Not present value B. Benefit cost ratio C. Accounting rate of return D. Internal rate of return

Description : Discounted cash flow criteria for investment appraisal does not include A. Not present value B. Benefit cost ratio C. Accounting rate of return D. Internal rate of return

Last Answer : B. Benefit cost ratio

With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project (A) Decreases (B) Increases (C) Increases linearly (D) Remain constant

Description : With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project (A) Decreases (B) Increases (C) Increases linearly (D) Remain constant

Last Answer : (A) Decreases

Which one of the following statements is true? a. Independ. Quality planning enables the project manager to manage the trade-off between customer expectations and budgetdent reviews and quality audits form part of quality assurance to ensure the project manager delivers on time and to budget. b. Quality assurance provides confidence to stakeholders that requirements for quality will be exceeded. c. Quality control verifies that the project deliverables conform to specification, are fit for purpose and meet stakeholder expectations.

Description : Which one of the following statements is true? a. Independent reviews and quality audits form part of quality assurance to ensure the project manager delivers on time and to budget. ... Quality planning enables the project manager to manage the trade-off between customer expectations  and budget

Last Answer : c. Quality control verifies that the project deliverables conform to specification, are fit for purpose and  meet stakeholder expectations.

Which one of the following statements is true? a. Independent reviews and quality audits form part of quality assurance to ensure the project manager delivers on time and to budget. b. Quality assurance provides confidence to stakeholders that requirements for quality will be exceeded. c. Quality control verifies that the project deliverables conform to specification, are fit for purpose and meet stakeholder expectations. d. Quality planning enables the project manager to manage the trade-off between customer expectations and budget.

Description : Which one of the following statements is true?  a. Independent reviews and quality audits form part of quality assurance to ensure the project  manager delivers on time and to budget. ... planning enables the project manager to manage the trade-off between customer  expectations and budget.

Last Answer : c. Quality control verifies that the project deliverables conform to specification, are fit for  purpose and meet stakeholder expectations.

Fill in the blanks. It is during the ______________ phase that the decision should be made regarding whether the project should continue. During this phase, ____________ must be considered and weighed against the potential benefit of the project’s success. Select one: a. completion, cost b. closeout, resources c. execution, performance d. planning, timing e. initiation, risk

Description : Fill in the blanks. It is during the ______________ phase that the decision should be  made regarding whether the project should continue. During this phase, ____________  must be considered and weighed ... . closeout, resources c. execution, performance d. planning, timing e. initiation, risk

Last Answer : e. initiation, risk

All of the following influence capital budgeting cash flows except . A. choice of depreciation method for tax purposes B. economic length of the project C. projected sales (revenues) for the project

Description : All of the following influence capital budgeting cash flows except . A. choice of depreciation method for tax purposes B. economic length of the project C. projected sales (revenues) for the project

Last Answer : B. economic length of the project