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- 2011-5-23
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The text states: The IRR rule uses the opportunity cost of capital as the rate that a project's IRR must exceed for the project to be accepted.
Then a question asks: How will the IRR change if opportunity cost of capital were to increase by 5 percentage points.
Yet the answer says: The IRR is unaffected by any change in any external rate, including the increase in opportunity cost of capital.
First, isn't a company's opportunity cost of capital an internal rate? More importantly, why is the IRR unaffected when the text says the IRR rule uses the opportunity cost of capital? |
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