In independent projects evaluation, results of internal rate of return and net present value lead to_____________?
Correct answer: C. Same decisions
- A. Cash flow decision
- B. Cost decision
- C. Same decisions
- D. Different decisions
Explanation
For independent projects with conventional cash flows, NPV and IRR normally produce the same accept-or-reject decision: accept when NPV is positive and IRR exceeds the cost of capital. Conflicts are more associated with mutually exclusive projects or unconventional cash flows.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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