If the internal rate of return is less than the hurdle rate the project should be rejected.
The internal rate of return is a capital budgeting method that is used to determine the profitability of an investment. The internal rate of return is the discount rate that equates the after-tax cash flows of an investment to the amount invested
The hurdle rate is the minimum discount rate a project should have so that it would be acceptable. The decision rule when using the internal rate of return is to accept the project if the internal rate of return is greater than the hurdle rate of the project. If this is not met, the project should be rejected.
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