In capital budgeting,a project is accepted only if the internal rate of return equals or ________.
A) exceeds the required rate of return
B) exceeds the inflation rate
C) exceeds the risk-free rate
D) exceeds the accrual accounting rate of return

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is the discount rate at which the net present value (NPV) of a project equals zero. In capital budgeting, a project is accepted only if its IRR equals or exceeds the required rate of return (RRR), which is the minimum acceptable return on investment. Therefore, option A is the correct answer. Option B is irrelevant as it does not relate to the acceptance decision. Option C is also irrelevant as it is not used as a benchmark for the acceptance decision. Option D is incorrect as the accrual accounting rate of return is not commonly used in capital budgeting.

In Capital Budgeting,a Project Is Accepted Only If the Internal