Using the internal rate of return method,a conventional investment project should be accepted if the internal rate of return is:
A)equal to,and only if it is equal to,the discount rate.
B)equal to or greater than the discount rate.
C)less than the discount rate.
D)negative.
E)positive.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of an investment equal to zero. Therefore, if the IRR is equal to or greater than the discount rate, the NPV will be positive and the project should be accepted. If the IRR is less than the discount rate, the NPV will be negative and the project should be rejected. Therefore, the best choice is B.

Using the Internal Rate of Return Method,a Conventional Investment Project