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The internal rate of return : (mark all that applies) is the more sound decision rule...

The internal rate of return : (mark all that applies)

is the more sound decision rule when dealing with mutually exclusive projects

is the rate that causes the net present value of a project to exactly equal zero.

does not need a required rate to calculate.

can effectively be used to analyze all investment scenarios.

rule states that a typical investment project with an IRR that is less than the required rate of return should be accepted.
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Answer #1

IRR should not be used in isolation to make any decision. IRR is the interest rate that makes the NPV = 0. There are a few drawbacks of the IRR approach which makes it a little less preferable. IRR should be greater than the required rate of return if you want to select the project. Hence, the correct options are-

Is the rate that causes the net present value of a project to exqctly equal zero.

Does not need a required rate to calculate.

Do leave an upvote if you find this helpful. In case of any doubt please let me know in the comment section.

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