Chapter 4: Net Present Value
Questions 22 and 23 show that the IRR is an interest rate that makes the net present value equal to zero, but how do you use it? To use the IRR, you follow a simple rule: When the IRR < interest rate, do not make the investment. When the IRR > interest rate, make the investment. For this reason, the IRR is sometimes called the hurdle rate. ................
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