The Internal Rate of Return of Project “B” is 12.96%. If Projects “A” and “B” are...
The Internal Rate of Return of Project “B” is 12.96%. If Projects “A” and “B” are independent, considering only at the IRR method, which project(s) should Big Company proceed with?
Group of answer choices
a. Project "A" should be chosen because its IRR is lower than Project "B" indicating a more efficient use of capital.
b. Project "B" should be chosen because the IRR is higher than the IRR of Project "A" indicating that Project "B" has a higher return.
c. Both Projects should be chosen because both projects have IRR's > WACC indicating that both projects have acceptable returns.
d. Neither project should be chosen because both projects have IRR's > WACC, indicating that the costs of both projects exceed the initial investment.
e. None of the answers above are correct.
Homework Answers
| Answer : c. Both Projects should be chosen because both projects have IRR's > WACC indicating that both projects have acceptable returns. |
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The Internal Rate of Return of Project “B” is 12.96%. If
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