Which of the following statements about comparing the techniques of net present value (npv) and internal rate of return (irr) is/are correct?
A)I only
B)II only
C)Both I and II
D)Neither I nor II

Question

Quizplus · Accepted Answer

I. The NPV method is an absolute measure, while the IRR method is a relative measure.
II. The NPV method assumes that cash flows are reinvested at the cost of capital, while the IRR method assumes that cash flows are reinvested at the same rate as the IRR.

Both statements are correct. Option C is the only option with both statements being correct.

Which of the Following Statements About Comparing the Techniques of Net