Question

A financing project is acceptable if its IRR is:
A. exactly equal to its net present value (NPV).
B. exactly equal to zero.
C. greater than the discount rate.
D. less than the discount rate.
E. negative.

Answer 1

Answer:

C. greater than the discount rate.

Explanation:

A project is only acceptable if IRR is greater than the discount rate / required rate of return. IRR is a discount rate when NPV of the project is zero. If  the IRR is higher the project HAS more growth potential. The project with higher IRR is acceptable because it adds more value to shareholders wealth.