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Select one disadvantage of IRR as a capital budget method.

It is not useful for comparing projects with different lifespans.

It fails to account for the time value of money.

It can only be used with projects that have positive cash flows.

It can be difficult to interpret and understand.

Which of the following is an example of an operational risk for a company that manufactures automobiles?

A state tax increase that makes buying and registering a car more expensive

Rising interest rates that affect the terms of car loans, thereby decreasing demand

Damage to completed cars held on a storage lot

A national car rental agency backing out of a contract to buy a certain volume of new cars

Jerome needs funding to help start a business selling school supplies. He uses a website that connects him directly with a lender who charges a below-market interest rate.

What type of financing resource is Jerome using?

Trade credit

Peer-to-peer lending

Commercial lending

Factoring

Answer :

Multiple choice questions refer to selecting the best alternative out of the options for the given questions:

Select one disadvantage of IRR as a capital budget method.

It can be difficult to interpret and understand.

The internal rate of return (IRR) can be a complex concept to understand, especially when used in the context of capital budgeting. The IRR is a financial metric that represents the rate of return that an investment is expected to generate. It is used to evaluate the feasibility of a potential investment by comparing the IRR to a required rate of return or cost of capital.


Which of the following is an example of operational risk for a company that manufactures automobiles?

Damage to completed cars held on a storage lot

Operational risk refers to the dangers and ambiguities that businesses encounter on a daily basis. It could be brought on by a malfunctioning system or defective components. An operational risk for an auto manufacturer would be damage to finished vehicles stored on a lot.

What type of financing resource is Jerome using?

Peer to Peer lending

Peer-to-peer lending is a type of lending that allows individuals to borrow and lend money without using a traditional financial institution, such as a bank, as an intermediary

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