A characteristic of capital budgeting is that The internal rate of return must be greater than the cost of capital
Added by Justin M.
Step 1
Capital budgeting is the process of evaluating and selecting long-term investments that are in line with the goal of a company to maximize its value. Show more…
Show all steps
Your feedback will help us improve your experience
Jenny Wu and 62 other Principles of Accounting educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Recommended Videos
When the net present value is negative, the internal rate of return is _____ the cost of capital
Jenny W.
the npv method: assumption that cash flow are invested at the cost of capital is generally more reasonable than the IRR's assumption that cash flow are reinvested as to IRR. this is an important reason why the npv method is generally preferred over the IRR method
Farruh T.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD