Return on investment (ROI) can be measured on either a dollar basis or a rate of

Question

Return on investment (ROI) can be measured on either a dollar basis or a rate of return basis. Which of the following statements about ROI is incorrect? A. Net present value (NPV) is a dollar return measure. B. Internal rate of return (IRR) is a rate of (percentage) return measure. C. ROI measures use time value of money (discounted cash flow) concepts. D. The calculation of IRR requires the project cost of capital (discount rate). E. The calculation of NPV requires the project cost of capital (discounted rate).

Explanation / Answer

The correct answer is option D = The calculation of IRR requires the project cost of capital (discount rate).

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