You are considering a project which has an internal rate of return that is equal to the required return.This means that:
A)the net present value is negative in an amount equal to the initial investment
B)the project is returning the minimal amount that is acceptable to you
C)the profitability index is greater than one
D)the average accounting return exceeds the project's required return
E)the project will lower the value of the firm

Question

Quizplus · Accepted Answer

If the internal rate of return is equal to the required return, it means that the project is just returning the minimal amount that is acceptable to the investor. In other words, the project is not generating any excess returns above the required return. Therefore, the best choice is B. All other options are incorrect.

You Are Considering a Project Which Has an Internal Rate