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Basic Question 23 of 29
Which of the following statements is false?
B. The IRR rule states that accepting a project with an IRR higher than the cost of capital will increase shareholders' wealth.
C. Non-conventional cash flows can result in multiple NPVs for a project.
A. The NPV rule states that accepting a project with positive NPV will increase shareholders' wealth.
B. The IRR rule states that accepting a project with an IRR higher than the cost of capital will increase shareholders' wealth.
C. Non-conventional cash flows can result in multiple NPVs for a project.
User Contributed Comments 2
| User | Comment |
|---|---|
| johntan1979 | B is because NPV is ALWAYS positive when IRR > cost of capital |
| Inaganti6 | John don't state the obvious id expect you to talk more about why std. Deviation is not an ideal risk measure |
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh
Learning Outcome Statements
describe the capital allocation process, calculate net present value (NPV), internal rate of return (IRR), and return on invested capital (ROIC), and contrast their use in capital allocation
CFA® 2024 Level I Curriculum, Volume 2, Module 5.