Project a Has an Internal Rate of Return (IRR) of 15

question 58

Multiple Choice

Project A has an internal rate of return (IRR) of 15 percent. Project B has an IRR of 14 percent. Both projects have a cost of capital of 12 percent. Which of the following statements is most correct?

• A) Both projects have a positive net present value (NPV).
• B) Project A must have a higher NPV than Project B.
• C) If the cost of capital were less than 12 percent, Project B would have a higher IRR than Project A.
• D) Statements a and c are correct.
• E) Statements a, b, and c are correct.

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Definitions:

Interval Measures

A scale of measurement in which the numerical differences between values are meaningful, and there is no true zero point.

Equal Distance

A measure indicating that two or more points are at the same spatial or conceptual distance from each other.

Number

A mathematical object used to count, measure, and label.

Computed

Calculated or determined by a computer or computer process.