Homework Answers
Solution :
As per the IRR Rule,
a. In case the required rate of return of a Capital budgeting project is lesser than the project’s internal rate of return, the project should be accepted.
b. In case the required rate of return of a Capital budgeting project is greater than the project’s internal rate of return, the project should not be accepted.
From the above it can be inferred that
A capital budgeting project is not acceptable if the rate of return required for such a project is greater than the project’s internal rate of return.
Thus the statement given is False
The solution is Option 2 : False
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