Use the internal rate of return method

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1. Why should we not solely use the internal rate of return (IRR) method to decide whether to invest in a project? What are the drawbacks of the IRR method?

2. What are a few differences between common stock and preferred stock? Do you feel that preferred stock is more similar to a bond or common stock? Why? How do we value a share of preferred stock?

3. How about the impact of taxes on the deprecation methods? Which one would lower the firm's tax liability, a straight-line or MACRS? Is it necessary for a firm to use the same method of calculating depreciation expenses for financial statements purposes? what the firm can do to increase its A/R and I/T turnovers ratios?

Reference no: EM131820790

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