36、The internal rate of return (IRR) method of evaluating investment projects:

A. is the preferred method for evaluating mutually exclusive projects.

B. is not sensitive to the pattern or timing of the cash flows from the project.

C. provides a dollar estimate of the effect of the project on shareholder wealth.

D. assumes that all cash flows from the project will be reinvested at the computed IRR.

[此贴子已经被作者于2008-11-7 14:28:22编辑过]

36、The internal rate of return (IRR) method of evaluating investment projects:

A. is the preferred method for evaluating mutually exclusive projects.

B. is not sensitive to the pattern or timing of the cash flows from the project.

C. provides a dollar estimate of the effect of the project on shareholder wealth.

D. assumes that all cash flows from the project will be reinvested at the computed IRR.

  
Correct answer = D

"Capital Budgeting," John D. Stowe and Jacques R. Gagné
2008 Modular Level I, Vol. 4, pp. 21-25
Study Session 11-44-d, e
calculate and interpret the results using each of the following methods to evaluate a single capital project: net present value (NPV), internal rate of return (IRR), payback period, discounted payback period, average accounting rate of return (AAR), and profitability index (PI);
explain the NPV profile, compare and contrast the NPV and IRR methods when evaluating independent and mutually exclusive projects, and describe the problems that can arise when using an IRR
The internal rate of return method assumes that the cash flows from a project are reinvested at the project's internal rate of return; the net present value method assumes that cash flows are reinvested at the cost of capital. 

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