The internal rate of return tends to be:
A) easier for managers to comprehend than the net present value.
B) extremely accurate even when cash flow estimates are faulty.
C) ignored by most financial analysts.
D) used primarily to differentiate between mutually exclusive projects.
E) utilized in project analysis only when multiple net present values apply.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is often considered easier for managers to comprehend than the net present value (NPV). This is because the IRR is a percentage return metric that can be compared to required rates of return or cost of capital, which makes it more intuitive for decision-making.

The Internal Rate of Return Tends to Be