For the internal rate of return to rank projects the same way as the net present value rule,which condition must exist?

Question

Quizplus · Accepted Answer

When the cutoff rate used for the internal rate equals the cost of capital, the internal rate of return rule will rank projects the same way as the net present value rule. This is because both rules assume reinvestment at the cost of capital, and therefore the internal rate of return will just be the discount rate that yields a net present value of zero, which is equivalent to the cost of capital. The other conditions listed (B, C, and D) do not affect the relationship between internal rate of return and net present value.

For the Internal Rate of Return to Rank Projects the Same