The internal rate of return (IRR) is defined as the discount rate that equates the present value

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The internal rate of return (IRR) is defined as the discount rate that equates the present value of the expected net cash flows from a project with the present value of the net investment.

a. A project is acceptable if it has an IRR greater than or equal to the firm’s cost of capital.

b. The NPV and IRR approaches give the same accept–reject signals for independent projects, except in the case of mutually exclusive investment alternatives.

c. The IRR approach can also lead to multiple internal rates of return in some cases. GT=75

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