The internal rate of return (IRR) rule can be best stated as:
A) An investment is acceptable if its IRR is exactly equal to its net present value (NPV).
B) An investment is acceptable if its IRR is exactly equal to zero.
C) An investment is acceptable if its IRR is less than the required return, or else it should be rejected.
D) An investment is acceptable if its IRR exceeds the required return, or else it should be rejected.
E) An investment is acceptable if its IRR exceeds its depreciation rate.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) rule states that an investment is considered acceptable if its IRR is greater than the required rate of return. The IRR is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. If the IRR is above the required return, it means the project is expected to generate a return higher than the cost of capital, making it a worthwhile investment.

The Internal Rate of Return (IRR) Rule Can Be Best