PRC-2 · Chapter 6 · Question 21 of 45
When applying the Internal Rate of Return (IRR) appraisal technique, a proposed business project is universally considered acceptable if:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The calculated IRR exceeds the firm's required cost of capital.
Explanation
The fundamental IRR decision rule dictates that a project should be accepted if its internal yield (IRR) is strictly greater than the hurdle rate or cost of capital required to fund it.
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