Which of the following is the difference between the net present value (NPV) method and the internal
Fantastic news! We've Found the answer you've been seeking!
Question:
Which of the following is the difference between the net present value (NPV) method and the internal rate of return (IRR) method of capital budgeting?
a. IRR is used for choosing among mutually exclusive projects, and NPV is not used for this purpose.
b. NPV measures profitability in relative terms, whereas IRR measures profitability in absolute terms.
c. NPV assumes that each cash inflow received is reinvested at the required rate of return, whereas the IRR assumes that each cash inflow is reinvested at the computed IRR.
d. NPV considers the time value of money and IRR does not
Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
Posted Date: