A 15% internal rate of return (IRR) on a proposed capital investment indicates all of the following except:
A) The economic rate of return on the project is expected to be 15%.
B) Use of a 15% discount rate would result in an estimated project NPV of zero.
C) An acceptable capital project if the cost of capital is 16 percent or higher.
D) A positive net present value (NPV) if the cost of capital is less than 15%.
E) An acceptable project, in a present value sense, if the discount rate is less than 15%.

Question

Quizplus · Accepted Answer

A 15% IRR means the project's return equals 15%, and it would be acceptable if the cost of capital is lower than this, not higher. If the cost of capital is 16% or higher, the project's return would not cover the cost of capital, making it unacceptable.

A 15% Internal Rate of Return (IRR) on a Proposed