Results from the net present value (NPV) method and the internal rate of return (IRR) method may differ between projects if the projects differ in all the following except:
A) Required initial investment.
B) Cash-flow pattern.
C) Cost of capital (i.e., discount rate).
D) Length of useful life of the two projects.
E) Book (accounting) rate of return on the two projects.

Question

Quizplus · Accepted Answer

The book (accounting) rate of return does not affect the results of the NPV and IRR methods as these methods are based on cash flows, not accounting income.

Results from the Net Present Value (NPV) Method and the Internal