- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 5. Capital Investments and Capital Allocation
- Subject 2. Capital Allocation
CFA Practice Question
When considering capital projects, which of the following statements is most accurate? Compared to the NPV method, the IRR method ______
A. has the more appropriate reinvestment rate assumption.
B. can result in multiple values.
C. uses more accurate estimates of the project's cash flows.
Explanation: If the cash flows of the project are nonconventional, the IRR method can result in multiple IRRs.
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