Which of the following statements is FALSE?
A)The incremental IRR investment rule applies the IRR rule to the difference between the cash flows of the two mutually exclusive alternatives.
B)When a manager must choose among mutually exclusive investments,the NPV rule provides a straightforward answer.
C)The likelihood of multiple IRRs is greater with the regular IRR rule than with the incremental IRR rule.
D)Problems can arise using the IRR method when the mutually exclusive investments have differences in scale.

Question

Quizplus · Accepted Answer

The likelihood of multiple IRRs is actually greater with the regular IRR rule than with the incremental IRR rule. The incremental IRR calculation takes into account the difference in cash flows between two mutually exclusive alternatives and provides a more accurate measure of the investment's return. The other statements are true.

Which of the Following Statements Is FALSE