Asked by Lyric Bolden on May 10, 2024
Verified
When using internal rate of return to evaluate investment projects, if the internal rate of return is less than the required rate of return, the project should be accepted.
Internal Rate of Return
A financial metric used to evaluate the profitability of an investment, representing the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero.
Required Rate of Return
The minimum annual percentage return a investor expects to achieve from an investment, considering the risk involved.
- Gain an understanding of the elementary concepts of capital budgeting and the assorted approaches for the evaluation of investment projects.
- Master the technique of determining the net present value (NPV) of an investment and recognize its critical role in investment decision-making processes.
Verified Answer
Learning Objectives
- Gain an understanding of the elementary concepts of capital budgeting and the assorted approaches for the evaluation of investment projects.
- Master the technique of determining the net present value (NPV) of an investment and recognize its critical role in investment decision-making processes.
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