Other things held constant, an INCREASE in the cost of capital will result in a DECREASE in a project's IRR.

Question

Quizplus · Accepted Answer

The Internal Rate of Return (IRR) is a measure of a project's profitability and is independent of the cost of capital. An increase in the cost of capital does not affect the IRR itself, but it may affect the decision to undertake the project if the IRR is compared to the cost of capital.

Other Things Held Constant, an INCREASE in the Cost of Capital