The internal rate of return tends to be:
A) Easier for managers to comprehend than the net present value.
B) Extremely accurate even when cash flow estimates are faulty.
C) Ignored by most financial analysts.
D) Used primarily to differentiate between mutually exclusive projects.
E) Utilized in project analysis only when multiple net present values apply.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is often easier for managers to comprehend because it is expressed as a percentage, which is more intuitive than the net present value (NPV), which is expressed in currency terms.

The Internal Rate of Return Tends to Be