Select all that are true with respect to the IRR rule for making capital investment decisions. Group of answer choices The IRR rule does not distinguish between borrowing and lending One can use the IRR rule for investment decision making without knowing the discount rate The project with the highest IRR does not necessarily create the most value add The IRR rule ignores cash flows that are very far in the future The project with the highest IRR is by definition the project with the most value add The IRR is the discount rate that makes the project's NPV equal to zero
Select all that are true with respect to the IRR rule for making capital investment decisions. Group of answer choices The IRR rule does not distinguish between borrowing and lending One can use the IRR rule for investment decision making without knowing the discount rate The project with the highest IRR does not necessarily create the most value add The IRR rule ignores cash flows that are very far in the future The project with the highest IRR is by definition the project with the most value add The IRR is the discount rate that makes the project's NPV equal to zero
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
Related questions
Question
Select all that are true with respect to the IRR rule for making capital investment decisions.
Group of answer choices
The IRR rule does not distinguish between borrowing and lending
One can use the IRR rule for investment decision making without knowing the discount rate
The project with the highest IRR does not necessarily create the most value add
The IRR rule ignores cash flows that are very far in the future
The project with the highest IRR is by definition the project with the most value add
The IRR is the discount rate that makes the project's NPV equal to zero
Expert Solution
Step 1: Introduction
IRR is the discount rate that makes the NPV of a project equal to zero. In other words, it's the rate at which the present value of future cash inflows equals the initial investment.
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