The primary advantage of using the internal rate of return (IRR) method to evaluate capital budgeting projects is that it
Accounting MCQs | Accounting MCQs

The primary advantage of using the internal rate of return (IRR) method to evaluate capital budgeting projects is that it

Results in decisions that will maximize shareholder wealth.
Results in decisions that will maximize income.
Is easy to understand and communicate.
Assumes a conservative reinvestment rate.Show Result

Correct - Your answer is correct.

Wrong - Your answer is wrong.

Detailed Answer

Answer (C) is correct. The IRR is easy to understand and communicate. Essentially, if the IRR is higher than the company’s desired rate of return then the investment is desirable.