Which of the following statement is true?
A)One must know the discount rate to compute the NPV of a project but one can compute
The IRR without referring to the discount rate.
B)One must know the discount rate to compute the IRR of a project but one can compute the
NPV without referring to the discount rate.
C)Payback accounts for time value of money.
D)There will always be one IRR regardless of cash ﬂows.
E)Average accounting return is the ratio of total assets to total net income.

Question

Quizplus · Accepted Answer

The NPV (Net Present Value) calculation requires a discount rate to discount future cash flows to their present values. In contrast, the IRR (Internal Rate of Return) is the discount rate that makes the NPV of all cash flows from a particular project equal to zero, and it is found without initially knowing the discount rate.

Which of the Following Statement Is True