The difference between the cost of capital and the IRR for a project is the minimum amount of error that can occur without impacting the investment decision.

Question

Quizplus · Accepted Answer

The difference between the cost of capital and the IRR (Internal Rate of Return) does not represent the minimum amount of error but rather indicates the project's profitability over its cost of financing. A positive difference suggests the project is expected to generate returns above its cost, making it potentially attractive for investment.

The Difference Between the Cost of Capital and the IRR