When the internal rate of return is higher than the hurdle rate, a company should invest in the capital project.

Question

Quizplus · Accepted Answer

When the internal rate of return (IRR) is higher than the hurdle rate (the minimum rate of return on a project that a company is willing to accept before starting a project), it indicates that the project is expected to generate returns greater than the company's minimum acceptable return, making it a financially viable investment.

When the Internal Rate of Return Is Higher Than the Hurdle