Which one of the following statements is true?
A)You must know the discount rate to compute the NPV but not the IRR.
B)You must have a discount rate to compute,NPV,IRR,PI,and discounted payback.
C)Payback uses the same discount rate as that applied in the NPV calculation.
D)Financing projects can only ever have one IRR.
E)Financing projects are acceptable if the NPV is negative.

Question

Quizplus · Accepted Answer

The Net Present Value (NPV) calculation requires a discount rate to discount future cash flows to their present value, whereas the Internal Rate of Return (IRR) is calculated as the discount rate that makes the NPV of cash flows equal to zero, thus not requiring a predetermined discount rate.

Which One of the Following Statements Is True