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Is the following statement true or false. Why or why not? “XYZ Company has “hard capital...

Is the following statement true or false. Why or why not?

“XYZ Company has “hard capital constraints.” Therefore, if both projects have a positive NPV, I will recommend that we accept the one with the highest IRR”

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Answer #1

The given statement is TRUE because there are two capital projects and both are having positive net present value and they are hard capital constraints, it will mean that the capital are are lower from a company perspective and it should be allocating it to the best project, so I will be trying to allocate it through projection of internal rate of return. It will be helpful in finding the best project and it will also be helpful in allocating the money into the best project, so it is maximizing the rate of return over the cost of capital.

The given statement is TRUE.

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