Under the IRR analysis, which of the following statements best describes the decision rule for potential investments?

Question

Quizplus · Accepted Answer

The IRR (Internal Rate of Return) is a metric used to evaluate the profitability of potential investments. The decision rule is that if the IRR of a potential investment is equal to or greater than the investor's required rate of return, the investment is considered acceptable. This is because the IRR represents the discount rate at which the net present value (NPV) of all cash flows from a particular project equals zero. If the IRR is above the required rate of return, it means the project is expected to generate a return higher than the minimum the investor would accept, making it a worthwhile investment.

Under the IRR Analysis, Which of the Following Statements Best