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

question 22

Multiple Choice

Project Alpha has an internal rate of return (IRR) of 15 percent.Project Beta has an IRR of 14 percent.Both projects have a required return of 12 percent.Which of the following statements is MOST correct?

• A) Both projects have a positive net present value (NPV).
• B) Project Alpha must have a higher NPV than Project Beta.
• C) If the required return were less than 12 percent, Project Beta would have a higher IRR than Project Alpha.
• D) Project Beta has a higher profitability index than Project Alpha.

---

Definitions:

Common Stock

Equity ownership in a corporation, with claims on its earnings and assets being secondary to those of bondholders and preferred shareholders.

Shares

Units of equity ownership in a corporation, representing a portion of the company's capital stock.

Under IFRS

Refers to the accounting and reporting standards under the International Financial Reporting Standards framework, used globally.

Equity

The ownership interest held by shareholders in a corporation, represented by the residual assets of the company after deducting liabilities.