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| The net present value (NPV) method and the internal rate of return (IRR) method are used to analyze capital expenditures. The IRR method, as contrasted with the NPV method, A. Assumes that the rate of return on the reinvestment of the cash proceeds is at the indicated rate of return of the project analyzed rather than at the discount rate used. B. Incorporates the time value of money whereas the NPV method does not. C. Is considered inferior because it fails to calculate compounded interest rates. D. Is preferred in practice because it is able to handle multiple desired hurdle rates, which is impossible with the NPV method. |