In capital budgeting, a project is accepted only if the internal rate of return equals or:
A)exceeds the required rate of return
B)is less than the required rate of return
C)exceeds the net present value
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 is equal to zero. If the IRR exceeds the required rate of return, it means that the project is expected to generate a rate of return that is at least as high as the minimum acceptable rate of return required by the company. Therefore, the project can be accepted. If the IRR is less than the required rate of return, it means that the project is not expected to generate a rate of return that is high enough to meet the company's requirements, and it should be rejected. Exceeding the NPV or the accrual accounting rate of return may be desirable, but it is not a condition for accepting a project.

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