Which of the following statements is necessarily true?
A)If two projects are mutually exclusive, the one with the higher internal rate of return should be selected so long as its internal rate of return is greater than the cost of capital for
The firm.
B)If the internal rate of return of a project is equal to its required rate of return, the project will have a positive NPV.
C)If the internal rate of return of a project is greater than 0, the project will also have a positive NPV.
D)If the internal rate of return of a project is less than its required rate of return, the project should always be rejected.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) is a metric used to evaluate the profitability of potential investments. If the IRR of a project is less than its required rate of return (also known as the hurdle rate or the cost of capital), it means the project is expected to generate returns lower than the minimum the company or investor requires, making it an unattractive investment. Therefore, such projects should generally be rejected.

Which of the Following Statements Is Necessarily True