one weakness of the internal rate of return (irr) approach is that group of answer choices it implicitly assumes that the firm is able to reinvest the cash flows from the project at the firm's irr (i.e. assumed reinvestment rate

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21-10-2022
Business

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one weakness of the internal rate of return (irr) approach is that group of answer choices it implicitly assumes that the firm is able to reinvest the cash flows from the project at the firm's irr (i.e. assumed reinvestment rate

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shomerajeshwari90 shomerajeshwari90 · Answer 1 · 2022-10-29T13:59:56-04:00

The correct answer is that Internal rate of return (IRR), implicitly assumes that the firm is able to reinvest the cash flows from the project at the firm's assumed investment rate.

The value of any project is evaluated using the internal rate of return (IRR). The IRR also demonstrates how successfully a project generates revenues. However before committing in any project, organizations utilize the metric to plan.

Utilizing the internal Rate of Return for a calculating the similarity makes it significantly more advantageous. IRR is less efficient when employed as a stand-alone, singular value. It is frequently used to rank many viable investment decisions that a business anticipates making. An investment is much more favorable the higher its IRR. That organization becomes potentially the top investment choice.

The complete question is here:

one weakness of the internal rate of return (IRR) approach is that-

(a) It ignores the cash flow beyond a certain period

(b) It does not consider the timing of the cash flows from a project

(c) it implicitly assumes that the firm is able to reinvest the cash flows from the project at the firm's IRR.

(d) It is rarely used by financial managers because it is difficult to calculate

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