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The internal rate of return of a capital investment Changes when the cost of capital changes....

The internal rate of return of a capital investment

  1. Changes when the cost of capital changes.
  2. Is equal to the annual net cash flows divided by one half of the project's cost when the cash flows are an annuity.
  3. Must exceed the cost of capital in order for the firm or investor to accept the investment.
  4. Is similar to the yield to maturity on a bond.
  5. Answers c and d are both correct.
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Answer #1

Answer is Option e. ie, answers option c and d both are correct

option c says that IRR must exceed cost of capital in order for the firm or investor to accept the investment.

a firm accepts a project if its IRR higher than cost of capital. then only the return from the project will be satisfactory.

option d says, IRR is similiar to the yeild to maturity on a bond

yeah, both are similiar in their concept of time value of money

Option A and Option B are wrongand it is not related to IRR

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