Using and internal rate of return decision rule,a project will be accepted if ________________
A)It has an IRR greater than the hurdle rate
B)It has a positive IRR
C)It has an IRR less than the hurdle rate
D)It has a negative IRR

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate at which the net present value of cash flows from a project is zero. Therefore, if the IRR is greater than the hurdle rate (the required rate of return), then the project is expected to generate a return that exceeds the cost of capital, making it an attractive investment opportunity. If the IRR is less than the hurdle rate, then the project is expected to generate a return that is less than the cost of capital, meaning it would be a less attractive investment opportunity. Additionally, if the IRR is negative, it indicates that the project is expected to generate a loss and would not be a viable investment. Therefore, the best choice is A.

Using and Internal Rate of Return Decision Rule,a Project Will