Which of the following statements regarding projects with no IRR or multiple IRR
ID: 1174464 • Letter: W
Question
Which of the following statements regarding projects with no IRR or multiple IRRs is true?
Projects with no IRR should always be rejected since they offer no return.
A project with multiple IRRs should be accepted so long as all of the IRRs exceed the cost of capital.
A project with multiple IRRs should be accepted as long as at least one of the IRRs exceeds the cost of capital.
None of the above statements is true.
A.Projects with no IRR should always be rejected since they offer no return.
B.A project with multiple IRRs should be accepted so long as all of the IRRs exceed the cost of capital.
C.A project with multiple IRRs should be accepted as long as at least one of the IRRs exceeds the cost of capital.
D.None of the above statements is true.
Explanation / Answer
C. A project with multiple IRRs should be accepted as long as at least one of the IRRs exceeds the cost of capital , project should be accepted if the IRR is greater than the cost of capital (discounting rate) ,and in case of more than one IRR ,the one which is closer to the cost of capital should be accepted.
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