An Internal Rate of Return Greater Than the Cost of Capital

question 58

True/False

An internal rate of return greater than the cost of capital guarantees that the firm earns at least its required return. Investing in such an project would enhance the market value of the firm and therefore the wealth of its owners.

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Definitions:

Product Liability Suit

A legal claim against a manufacturer or seller for producing or selling a defective product that caused harm to the consumer.

Negligence

The failure to exercise the level of care that a reasonably prudent person would under similar circumstances, resulting in harm.

Cause in Fact

A legal principle determining whether a defendant's actions are the actual cause of the plaintiff's injury.

Injury

A physical or mental harm to a person that is caused by an accident, disease, or some other event.