Which of the statements below describes the IRR decision criterion?
A)The decision criterion is to accept a project if the IRR falls below the desired or required return rate.
B)The decision criterion is to reject a project if the IRR exceeds the desired or required return rate.
C)The decision criterion is to accept a project if the IRR exceeds the desired or required return rate.
D)The decision criterion is to accept a project if the NPV is positive.

Question

Quizplus · Accepted Answer

The IRR decision criterion states that a project should be accepted if its internal rate of return exceeds the desired or required return rate. This means that the project is generating enough returns to meet or exceed the required rate of return. Therefore, statement C is the correct description of the IRR decision criterion. Statements A and D refer to the NPV decision criterion, which accepts a project if NPV is positive. Statement B is incorrect, as a higher IRR is generally desirable in a project, and exceeding the desired or required return rate would be a positive outcome.

Which of the Statements Below Describes the IRR Decision Criterion