Which of the following statements is CORRECT? a. To find the MIRR, we discount t

Question

Which of the following statements is CORRECT?

a. To find the MIRR, we discount the TV at the IRR. b. The IRR method appeals to some managers because it gives an estimate of the rate of return on projects rather than a dollar amount, which the NPV method provides. c. The discounted payback method eliminates all of the problems associated with the payback method. d. When evaluating independent projects, the NPV and IRR methods often yield conflicting results regarding a project's acceptability. e. A project's NPV profile must intersect the X-axis at the project's WACC.

Explanation / Answer

The option The IRR method appeals to some managers because it gives an estimate of the rate of return on projects rather than a dollar amount like the NPV method provides is correct.

Explanation:

IRR explains the rate of return which the project will provide at a given future cash flow to compare with cost of capital of the project.

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