Internal rate of return rule can result in wrong decision

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Reference no: EM131928802

1. The internal rate of return rule can result in the wrong decision if:

a. the projects being compared are independent.

b. the projects being compared have normal cash flows.

c. the projects being compared are independent and have normal cash flows.

d. the projects being compared are mutually exclusive.

2. Which of the following statements is FALSE?

We need to know the cost of capital (WACC) in order to use the NPV rule.

If the cost of capital (WACC) is less than the IRR, the NPV will be positive.

In order to maximize shareholder wealth, reject capital budgeting projects with a negative NPV.

When faced with a set of alternative investments, choose the one with the lowest NPV in order to minimize the present value of the costs

Reference no: EM131928802

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