Which one of the following statements is correct in relation to independent projects?
A)The internal rate of return cannot be used to determine the acceptability of a project that has financing type cash flows.
B)A project with investing type cash flows is acceptable if its internal rate of return exceeds the required return.
C)A project with financing type cash flows is acceptable if its internal rate of return exceeds the required return.
D)The net present value profile is upsloping for projects with both investing and financing type cash flows.
E)Projects with financing type cash flows are acceptable only when the internal rate of return is negative.

Question

Quizplus · Accepted Answer

A project with investing type cash flows is considered acceptable if its internal rate of return (IRR) is higher than the required return. This is because the IRR represents the project's expected rate of return, and exceeding the required return indicates that the project is expected to generate value beyond the minimum threshold set by the investor or company.

Which One of the Following Statements Is Correct in Relation