If the internal rate of return from an investment is more than the opportunity cost of funds:
A)The firm should make the investment
B)The firm should not make the investment
C)The firm should only make the investment using retained earnings
D)The firm should only make part of the investment and wait to see if interest rates decrease

Question

Quizplus · Accepted Answer

If the internal rate of return from an investment is more than the opportunity cost of funds, it means that the investment is generating a return higher than what the firm could earn by investing the funds elsewhere. Therefore, the firm should make the investment as it is expected to be profitable and increase the value of the firm.

If the Internal Rate of Return from an Investment Is