Use the information below to answer the following question(s).Wet Water Company drills residential and commercial wells.The company is in the process of analyzing the purchase of a new drill.Information on the proposal is provided below:
Note: Other than the initial investment, cash flows are end of period.The working capital is returned at the end of the investment period.
-The net present value method is better than the internal rate of return because
A)managers generally find the NPV method easier to understand.
B)it always yields the same result as IRR.
C)IRR focuses more on accounting income.
D)it considers the source of cash flows.
E)the NPV's of different projects can be added together, and investments may have multiple required rates of return.

Question

Use the information below to answer the following question(s).Wet Water Company drills residential and commercial wells.The company is in the process of analyzing the purchase of a new drill.Information on the proposal is provided below:
  Note: Other than the initial investment, cash flows are end of period.The working capital is returned at the end of the investment period.
-The net present value method is better than the internal rate of return because
A)managers generally find the NPV method easier to understand. 
B)it always yields the same result as IRR. 
C)IRR focuses more on accounting income. 
D)it considers the source of cash flows. 
E)the NPV's of different projects can be added together, and investments may have multiple required rates of return.

Quizplus · Accepted Answer

The NPV method allows for the addition of NPVs from different projects and can accommodate varying required rates of return, making it more flexible and comprehensive than IRR, which can have multiple rates and does not allow for direct comparison of projects.

Use the Information Below to Answer the Following Question(s)