The internal rate of return (IRR) and the net present value (NPV) are tools that are widely used in real estate investment and finance decision making. An investor would most likely pursue an investment if which of the following circumstances was true?
A) The going-in IRR exceeds the investor's required rate of return
B) The going-in IRR is less than the investor's required rate of return
C) The going-in IRR exceeds the NPV
D) The going-in IRR is less than the NPV

Question

Quizplus · Accepted Answer

An investor would pursue an investment if the going-in IRR exceeds their required rate of return, as this indicates that the investment is likely to provide returns that meet or exceed their expectations. The NPV is also an important consideration, but a high NPV alone does not guarantee a profitable investment, as it is dependent on the discount rate used.

The Internal Rate of Return (IRR) and the Net Present