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Two companies examined the same capital budgeting project, which has an internal rate of return equal to 19 percent. One firm accepted the project, but the other firm rejected it. One of the firms must have made an incorrect decision.

“Two companies examined the same capital budgeting project, which has an internal rate of return equal to 19 percent. One firm accepted the project, but the other firm rejected it. One of the firms must have made an incorrect decision.” Discuss the validity of this statement.

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the...

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False The projects IRR is 19 percent for any firm th…View the full answer


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Related Book For  answer-question
Principles of Finance

Principles of Finance

ISBN: 978-1285429649

6th edition

Authors: Scott Besley, Eugene F. Brigham

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Posted Date: November 24, 2014 09:23:50
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