A basic rule in capital budgeting is that if a project's NPV exceeds its IRR, then the project should be accepted.

Question

Quizplus · Accepted Answer

The decision to accept a project in capital budgeting is based on whether the NPV (Net Present Value) is positive, not on its comparison with the IRR (Internal Rate of Return). The IRR is a rate of return, not a dollar amount, so it cannot be directly compared to NPV in this manner.

A Basic Rule in Capital Budgeting Is That If a Project's