Which of the following statements is CORRECT?
A) One defect of the IRR method versus the NPV is that the IRR does not take account of the time value of money.
B) One defect of the IRR method versus the NPV is that the IRR does not take account of the cost of capital.
C) One defect of the IRR method versus the NPV is that the IRR values a dollar received today the same as a dollar that will not be received until sometime in the future.
D) One defect of the IRR method versus the NPV is that the IRR does not take proper account of differences in the sizes of projects.
E) One defect of the IRR method versus the NPV is that the IRR does not take account of cash flows over a project's full life.

Question

Quizplus · Accepted Answer

The IRR method does consider the time value of money, similar to NPV, and it does account for cash flows over a project's full life. However, it may not properly reflect differences in project sizes, which is a limitation compared to NPV.

Which of the Following Statements Is CORRECT