Which of the following statements is CORRECT?

Question

Quizplus · Accepted Answer

The statement in option E is correct. The IRR method is often favored by managers because it gives them a percentage rate of return, which is easier to understand and compare to their required rate of return, whereas the NPV method provides a dollar amount. However, it is important to note that the NPV method is generally considered to be the better method for evaluating projects, as it takes into account the time value of money and the cost of capital, whereas the IRR method does not. The other statements are incorrect. The discounted payback method still suffers from the same problems as the regular payback method, the NPV and IRR methods usually give the same results for independent projects, the MIRR is calculated by compounding the cash inflows at the cost of capital and then taking the TV of that, and a project's NPV profile can intersect the X-axis at any point, not just at the WACC.

Which of the Following Statements Is CORRECT