Which of the following statements is correct?
A) Large costs occur at the end of nuclear power plants' lives because these plants have to be closed down,and shutdown costs are high due to the difficulty of handling radioactive materials.For this reason,it is possible that a nuclear plant project could have two IRRs.
B) If the Federal Reserve Board lowered interest rates,this would,other things held constant,tend to favor short-term as opposed to long-term projects.
C) For NPV versus IRR ranking conflicts to occur,the projects under consideration must have NPV profiles which cross one another.Crossing profiles can occur only if the two projects differ in the size of the required investment outlay.
D) All of the above statements are false.

Question

Quizplus · Accepted Answer

Statement A is correct because nuclear power plants indeed incur large costs at the end of their lifecycle due to the need for decommissioning and handling radioactive materials. This unique cost structure can lead to unconventional cash flow patterns, potentially resulting in multiple Internal Rate of Return (IRR) calculations.

Which of the Following Statements Is Correct