The internal rate of return will equal the discount rate


Determine whether the following statements are true or false:

-The internal rate of return will equal the discount rate when the net present value equals zero.

-The main disadvantage of the NPV method is the need for detailed, long-term forecasts of free cash flows generated by prospective projects.

-The modified internal rate of return represents the project's internal rate of return assuming that intermediate cash flows from the project can be reinvested at the project's required return.

-Using the weighted cost of capital as a cutoff rate assumes that the riskiness of the project being evaluated is similar to the riskiness of the company's existing assets.

-When several sign reversals in the cash flow stream occur, a project can have more than one IRR.

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Financial Management: The internal rate of return will equal the discount rate
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