On a purely theoretical basis, NPV is preferred over IRR because NPV assumes a more conservative reinvestment rate and does not exhibit the mathematical problem of multiple IRRs that often occurs when IRRs are calculated for nonconventional cash flows.

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This statement is true. NPV is preferred over IRR because it assumes a more conservative reinvestment rate and does not have the mathematical problem of multiple IRRs that can occur with nonconventional cash flows.

On a Purely Theoretical Basis, NPV Is Preferred Over IRR