The acceptance of an investment project implies that: Its IRR is greater than 15 percent.
Its NPV is greater than its IRR.
Its NPV is greater than 0.
A)1
B)2
C)3
D)Both 2 and 3

Question

Quizplus · Accepted Answer

The acceptance of an investment project is based on the NPV. If the NPV is positive, then the investment is accepted. The IRR is used to determine the profitability of the investment, but it is not the sole basis for acceptance. Therefore, choices A and B are incorrect. Choice C is correct because a positive NPV indicates that the investment will generate more value than the initial investment and is therefore worth pursuing.

The Acceptance of an Investment Project Implies That: Its IRR