Economics · Financial Management
The following statements have been made regarding the comparison between Net Present Value (NPV), Internal Rate of Return (IRR), and Return on Capital Employed (ROCE): 1. If a project has unconventional cash flows (more than one sign change), the IRR method may yield multiple rates, whereas the NPV method remains a reliable indicator of absolute wealth increase. 2. The ROCE method is superior to the Payback period because it considers the time value of money and uses cash flows rather than accounting profits. 3. The IRR method assumes that interim cash flows are reinvested at the company's cost of capital, making it more realistic than the NPV method for mutually exclusive projects. Which of the following combinations is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 11 and 3
- 22 and 3
- 31 and 2
- 41 only✓
Correct answer
1 only
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