Internal rate of return analysis suggest that a project should be undertaken if
A) NPV 0.
B) MB 0.
C) IRR discount rate.
D) discount rate inflation rate.

Question

Internal rate of return analysis suggest that a project should be undertaken if
A) NPV > 0.
B) MB > 0.
C) IRR > discount rate.
D) discount rate > inflation rate.

Quizplus · Accepted Answer

Internal rate of return (IRR) analysis indicates that a project should be undertaken if the IRR is greater than the discount rate. This means that the project is generating a higher rate of return than the cost of capital, making it a profitable investment. Therefore, option C is the best choice. Options A and B just consider the project's net present value (NPV) and marginal benefit (MB), respectively, but do not take into account the cost of capital. Option D is irrelevant, as it only considers inflation rate.

Internal Rate of Return Analysis Suggest That a Project Should