Reference no: EM132548334

1) The appeal of the IRR technique is due to the general disposition of business people to think in terms of rates of return rather than actual dollar returns.

True

False

2) Net present value (NPV) assumes that intermediate cash inflows are reinvested at the cost of capital, whereas internal rate of return (IRR) assumes that intermediate cash inflows can be reinvested at a rate equal to the project's IRR.

True

False

3) On a purely theoretical basis, IRR is the better approach to capital budgeting than NPV because IRR implicitly assumes that any intermediate cash inflows generated by an investment are reinvested at the firm's cost of capital.

True

False