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

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is often easier for managers to comprehend than net present value (NPV) because it provides a simple percentage return expected from a project, making it more intuitive to understand and compare against required rates of return or cost of capital.

The Internal Rate of Return Tends to Be