Hello,
I would like to ask question with regard to IRR. In the answer, it is stated that IRR has no effect when selecting project with the same scale of investment. IRR is important when:
1) Project has pre-specified co. rate
2) Project with different scale of investment is being compared.
So my questions are:
1) What does it mean by company pre-specified rate?
2) What does it means by different scale of investment?
From my understanding, IRR is not beneficial for mutually exclusive project like in this case due to: 1) different in initial investment & cash flow.
Is my understanding correct?
Thank You
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10y ago#11 Companies can set target rates of return for projects and a project'so IRR can be compared to thathe to see if the project is acceptable.
2 It means when investments are of substantially different sizes.
I do not agree with comment 2. Not sure what they are getting at.
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