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Managerial Accounting

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Managerial Accounting: When do you choose NPV over IRR method?

MGRACT-S4VYSO

Firms are most likely to select the net present value (NPV) method for evaluating capital budget projects over the internal rate of return (IRR) method when

A

competing projects have similar initial investment amounts.

B

competing projects have very different initial investment amounts.

C

the required rate of return is difficult to determine.

D

future cash flows are difficult to estimate.