Identify at least two major problems with the internal rate of return method of capital budgeting
What will be an ideal response?
The student could mention the issue of reinvesting intermediate cash flows at the IRR instead of at the cost of capital. A second issue is the problem of multiple IRRs if there is a mixture of positive and negative cash flows. The IRR method may also rank projects in a different order than the NPV when projects are of a different magnitude.
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According to the ethical system of utilitarianism, which of the following is true?
A. Some values must always be upheld, regardless of the consequences. B. Societal rules or customs should be used to mold values. C. Society will be enhanced if we all take care of ourselves and do not harm others. D. Individuals might choose between conflicting values by tallying the final results of the various acts. E. Seeking the greatest good for the greatest number of people should be the overriding concern of decision makers
Even though contracts are often fixed in the short run, as time passes, prices and costs can be changed to reflect the new competitive realities caused by a change in exchange rates
Indicate whether the statement is true or false.