COST ACCOUNTING
CAPITAL BUDGETING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
Strength dari konsep Internal Rate of Return adalah
|
|
Requires estimate of cost of capital
|
|
|
May not give value-maximizing decisions for mutually exclusive projects
|
|
|
May produce multiple IRRs
|
|
|
Tells whether firm value is increased
|
Explanation:
Detailed explanation-1: -The internal rate of return (IRR) is a metric used to estimate the return on an investment. The higher the IRR, the better the return of an investment. As the same calculation applies to varying investments, it can be used to rank all investments to help determine which is the best.
Detailed explanation-2: -Understanding the Internal Rate of Return (IRR) Rule The higher the projected IRR on a project-and the greater the amount it exceeds the cost of capital-the more net cash the project generates for the company. Meaning, in this case, the project looks profitable and management should proceed with it.
There is 1 question to complete.