The internal rate of return (IRR)is simply the return on a project viewed as an investment. Therefore any project whose IRR exceeds the cost of capital:

Question

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If a project's IRR is higher than the cost of capital, it means that the project is expected to generate a return that exceeds the cost of the money used to fund it. Therefore, it is considered a profitable investment and should be undertaken by the company if they have the resources to do so. This contributes to the company's wealth. Both options A and B are correct. Option C is incorrect as IRR is a better measure of profitability than NPV in certain situations, such as when comparing projects with different sizes or when cash flows are irregular.

The Internal Rate of Return (IRR)is Simply the Return on a Project