Question

internal rates of return for three alternative investment projects follow: project x, 14%; project y, 10%; and project z, 16%. if the company requires a 12% rate of return on its investments, it would accept all three projects on the basis of internal rate of return. group startstrue or false

Answer 1

The statement is false; while Projects X and Z would be accepted based on their IRRs exceeding the company's required rate of return of 12%, Project Y would not as its IRR is below the required rate.

Step-by-step explanation:

The internal rates of return for three alternative investment projects are as follows: Project X at 14%, Project Y at 10%, and Project Z at 16%. Considering the company requires a 12% rate of return on its investments, it would evaluate these projects against this benchmark.

Based on the internal rate of return (IRR) criterion, any project with an IRR that exceeds the company's required rate of return would be accepted. In this scenario, both Project X and Project Z have IRRs higher than 12% and thus would be accepted.

However, Project Y's IRR is lower than the required rate, which means it would generally be rejected. Therefore, the statement that the company would accept all three projects based on IRR is false.