I) In IRR method the cash flows from a project are reinvested at the cost of capital. II) IRR is the rate at which present value of cash inflows is equal to the amount of initial investment. II) It is the rate at which the NPV of the project is positive. IV) IRR method is based on concept of time value of money. V) In IRR method the cash flows from a project are reinvested at the IRR itself. Which of the following statements are incorrect about Internal rate of return (IRR): A. I, III and IV. B. III and V С. I, I and IV. D. I only.
I) In IRR method the cash flows from a project are reinvested at the cost of capital. II) IRR is the rate at which present value of cash inflows is equal to the amount of initial investment. II) It is the rate at which the NPV of the project is positive. IV) IRR method is based on concept of time value of money. V) In IRR method the cash flows from a project are reinvested at the IRR itself. Which of the following statements are incorrect about Internal rate of return (IRR): A. I, III and IV. B. III and V С. I, I and IV. D. I only.
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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Transcribed Image Text:I) In IRR method the cash flows from a project are reinvested at the cost of capital.
1)
II) IRR is the rate at which present value of cash inflows is equal to the amount of
initial investment.
III) It is the rate at which the NPV of the project is positive.
IV) IRR method is based on concept of time value of money.
V) In IRR method the cash flows from a project are reinvested at the IRR itself.
Which of the following statements are incorrect about Internal rate of return (IRR):
A. I, III and IV.
B. III and V
C. I, III and IV.
D. I only.
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