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The external rate of return (ERR) method will only have one solution (one rate or return value). O O True FalseWhich of the following is correct if the IRR > MARR? O ERR < IRR O ERR = MARR ERR < MARR O ERR > IRR

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1.External rate of return(ERR) method directly takes into account the interest rate external to a project at which net cash flows generated or required by the project over its life can be borrowed and reinvested. Net cash flows are discounted, net cash flows are to be compounded and then Err is calculated. So we would get only one solution. Hence, the correct option is True.

2. Internal rate of return (IRR) is a measure of an investment's rate of return that excludes the external factors. On the other hand, Minimum acceptable rate of return(MARR) is the minimum rate of return on a project a company is willing to accept before starting a project. There is a strong link between IRR, ERR and MARR. When IRR > MARR, the IRR > ERR > MARR. So the correct option is A. ERR < IRR.

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