If the cost of capital exceeds the internal rate of return, the firm should not make the investment.

Name: If the cost of capital exceeds the internal rate of return, the firm should not make the investment.
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Question

If the cost of capital exceeds the internal rate of return, the firm should not make the investment.​

Quizplus · Accepted Answer

If the cost of capital exceeds the internal rate of return (IRR), it means the investment will not generate a return sufficient to cover the cost of the capital used to fund it, making it financially unwise for the firm to proceed with the investment.

If the Cost of Capital Exceeds the Internal Rate of Return