Once the internal rate of return on a project is known,it is compared to which of the following?
A) The tax shield.
B) The cost of capital rate.
C) The tax rate.
D) The net present value of the project.

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) on a project is compared to the cost of capital rate to determine whether the project is worth investing in. If the IRR is higher than the cost of capital rate, then the project is considered to be profitable and worth investing in. If not, the project is not considered to be profitable and should be rejected. The tax shield, tax rate, and net present value are all important factors to consider in investment decisions, but they are not directly compared to the IRR.

Once the Internal Rate of Return on a Project Is