Which of these statements about valuation models is NOT correct?
A)NPV employs a weighted average cost of capital discount rate that reflects potential reinvestment.
B)IRR and NPV calculations typically make the same investment recommendations only when the projects are independent of each other.
C)If cash flows are not normal,IRR may arrive at multiple solutions.
D)IRR is a more robust determinant of project viability than NPV.

Question

Quizplus · Accepted Answer

The statement that "IRR is a more robust determinant of project viability than NPV" is not correct. In fact, NPV is considered a more reliable and accurate method for evaluating the viability of investment projects compared to IRR, as it takes into account the time value of money and provides a clear measure of profitability in absolute terms. IRR, on the other hand, can be misleading in situations where cash flows are irregular or when there are multiple IRRs, and it does not provide a clear measure of profitability in monetary terms.

Which of These Statements About Valuation Models Is NOT Correct