The IRR decision rule can be reversed because:
A) the NPV rule is not the same as the IRR.
B) the IRR is based on a mutually exclusive investment.
C) instead of an investment project it is a financing project.
D) the IRR is greater than 100%.

Question

Quizplus · Accepted Answer

The IRR decision rule can be reversed for financing projects because the IRR represents the cost of financing. In such cases, a lower IRR is preferable as it indicates a lower cost of borrowing, contrasting with investment projects where a higher IRR is sought after.

The IRR Decision Rule Can Be Reversed Because