If the internal rate of return exceeds the required rate of return for a project, then the net present value of that project is positive

Question

Quizplus · Accepted Answer

If the internal rate of return is greater than the required rate of return, it means the project is generating a return that exceeds the opportunity cost of capital, and therefore, the net present value will be positive. This makes the project acceptable according to the net present value method. Similarly, if the internal rate of return is greater than the required rate of return, it also suggests that the project is generating a return higher than its cost, and the project is acceptable according to the internal rate of return method as well.

If the Internal Rate of Return Exceeds the Required Rate