Busıness Fınance Iı Deneme Sınavı Sorusu #975302

In which of the following is the decision rule for internal rate of return technique given correctly if a project is independent?


Approve the project that provides IRR that is greater than the expected rate of return.

Approve the project that provides IRR that is lower than the expected rate of return.

Approve the project that provides the equal cash inflows to cash outflows. 

Approve the project that provides the highest IRR.

Approve the project that provides the lowest IRR.


Yanıt Açıklaması:

Decision rule for internal rate of return technique is as follows: If a project is independent, approve the project(s) that provides IRR that is greater than the expected rate of return (discount rate used in NPV technique). If a project is mutually exclusive, choose the project that provides the highest IRR (that is greater than the expected rate of return (discount rate used in NPV technique)). The correct answer is A.

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