The results of an NPV or IRR analysis are only as accurate as the cash flows used as inputs.

Question

Quizplus · Accepted Answer

This statement is true. The validity and accuracy of the NPV or IRR analysis are dependent on the accuracy and reliability of the cash flow projections used as inputs. If the cash flow projections are flawed or unrealistic, the resulting NPV or IRR analysis will be inaccurate and unreliable. Therefore, it is important to carefully scrutinize and validate the cash flow projections before using them in an NPV or IRR analysis.

The Results of an NPV or IRR Analysis Are Only