The internal rate of return (IRR) for an investment:
A) Frequently results in positive net present value (NPV) on attractive projects.
B) Generally coincides with the company's discount rate.
C) Disregards discounted cash flows.
D) On mutually exclusive projects may produce different project rankings than those produced by using the net present value (NPV) method.
E) Would tend to be reduced if a company used an accelerated method of depreciation for tax purposes rather than the straight-line (SL) method.

Question

Quizplus · Accepted Answer

The IRR method can rank projects differently than the NPV method, especially for mutually exclusive projects, due to differences in cash flow timing and scale.

The Internal Rate of Return (IRR) for an Investment