Net present value is preferred to internal rate of return for capital budgeting

Question

Net present value is preferred to internal rate of return for capital budgeting decisions because a. the internal rate of return for a project is different for each firm. b. the net present value allows you to compare mutually exclusive projects. c. the internal rate of return does not allow you to determine if the project is acceptable. d. the net present value is the only method that allows you to determine which independent project is acceptable. e. NPV contains information about a projects "safety margin" which is not inherent in IRR.

Explanation / Answer

c.The internal rate of return does not allow you to determine if the project is acceptable.

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