Which of the following statements is most correct?If a project’s internal rate of return (IRR) exceeds the cost of capital, then the project’s profitability index must be positive.If Project A has a higher IRR than Project B, then Project A must also have a higher NPV.The IRR calculation implicitly assumes that all cash flows are reinvested at a rate of return equal to the IRR.Group of answer choicesOnly statements I and II are incorrect.None of the statements above is incorrect.Only statement II is correct.Only statement I is correct.Only statement III is incorrect.

SOLUTION- EXPLANATION- IF IRR OF ANY INVESTMENT PROPOSAL IS MORE THAN ITS COST TO FINANCE CAPITAL…

Answered: Which of the following statements is…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following statements is most correct?

If a project’s internal rate of return (IRR) exceeds the cost of capital, then the project’s profitability index must be positive.
If Project A has a higher IRR than Project B, then Project A must also have a higher NPV.
The IRR calculation implicitly assumes that all cash flows are reinvested at a rate of return equal to the IRR.

Group of answer choices

Only statements I and II are incorrect.

None of the statements above is incorrect.

Only statement II is correct.

Only statement I is correct.

Only statement III is incorrect.

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