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Amiraneli [1.4K]
4 years ago
12

The internal rate of return (IRR): I. rule states that a typical investment project with an IRR that is less than the required r

ate should be accepted. II. is the rate generated solely by the cash flows of an investment. III. is the rate that causes the net present value of a project to exactly equal zero. IV. can effectively be used to analyze all investment scenarios. I and IV only II and III only I, II, and III only II, III, and IV only I, II, III, and IV
Business
1 answer:
Ierofanga [76]4 years ago
3 0

Answer:

II, III, and IV only

Explanation:

The first statement is wrong. IRR is the rate that causes the net present value of a projects cash-flows to exactly equal zero, and therefore a project with a required rate of return higher than the IRR would mean that the cash-flows have to be discounted by a higher rate, which would yield a negative net present value. Such a project would reduce shareholder wealth and should be rejected. The other 3 statements are correct.

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