Perhaps the greatest disadvantage of using the IRR method to evaluate investment opportunities is:
A) dealing with uncertain cash flows from the project.
B) the assumption that all cash flows from the project will be reinvested at the IRR.
C) the inability to calculate most IRRs without a computer.
D) the need to compare IRR with the firm's cost of capital which cannot be estimated precisely.
E) the fact that the technique does not account for risk.
Correct Answer:
Verified
Q50: According to the internal rate of return
Q51: A project requires an investment outlay of
Q52: Your company is planning to open a
Q53: If the _ is greater than or
Q54: The underlying cause of ranking conflicts between
Q56: An insurance firm agrees to pay you
Q57: Among the reasons many firms DON'T use
Q58: Some firms use the payback period as
Q59: What is the IRR for a project
Q60: In comparing the internal rate of return
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents