asked 62.4k views
2 votes
For a project with cash outflows during its life, the least preferred capital budgeting tool would be: A. internal rate of return. B. net present value. C. net present value.

1 Answer

3 votes

Answer:

A. internal rate of return.

Step-by-step explanation:

Net present value method: In this method, the initial investment is deducted from the cash inflows of the discounted present value. If the sum comes under positive than the project would otherwise not be beneficial to the company.

The internal rate of return is that return in which the net present value is zero, meaning that the initial investment is equal to the present value of the annual cash flows after taking into account the discount factor

Moreover, the IRR could be in multiples also i.e multiple IRR.

answered
User Singaravelan
by
7.9k points
Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.

Categories