Which of the following statements about NPV and IRR is false?
A
The discount rate that gives an NPV of zero is the project's IRR.
B
The IRR is the discount rate that equates the present value of the cash inflows with the present value of outflows..
C
For mutually exclusive projects, if the NPV method and the IRR method give conflicting rankings, you should use the IRRS to select the project.
D
The NPV method assumes that cash flows will be reinvested at the cost of capital while IRR rankings implicitly assume that cash flows are reinvested at the IRR.
Correct Answer: For mutually exclusive projects, if the NPV method and the IRR method give conflicting rankings, you should use the IRRS to select the project.
