If its IRR is greater than the cost of capital, a project should be accepted.

Question

Quizplus · Accepted Answer

If the internal rate of return (IRR) of a project is greater than the cost of capital, it means that the project is generating returns that exceed its cost of financing. Therefore, accepting the project would create value for the company and increase its overall profitability. On the other hand, if the IRR is less than the cost of capital, it would imply that the project is not generating enough returns to cover its financing costs, and accepting it would decrease the company's profitability.

If Its IRR Is Greater Than the Cost of Capital