A new manager received computations of the internal rate of return regarding his project proposal. What should the manager compare the computation results to in order to determine whether the project is potentially acceptable?
A new manager received computations of the internal rate of return regarding his project proposal. What should the manager compare the computation results to in order to determine whether the project is potentially acceptable?
To determine whether a project is potentially acceptable, the manager should compare the internal rate of return (IRR) to the required rate of return. The required rate of return is the minimum return that investors expect for providing capital to the project. If the IRR is greater than or equal to the required rate of return, the project is considered potentially acceptable as it promises returns at least equal to the cost of capital. Comparing the IRR to other metrics like the net present value or the annual interest rate would not provide a direct measure of the project's acceptability based on the expected returns.
C is correct
Agree with Mike12345678, but can anyone explain the logic?
C is correct, the project's internal rate of return is compared to the required rate of return to measure the project's profitability.
i also think C is correct
C is correct