alleryStart learning →A lower IRR is preferable for a loan because it means:
Athe loan principal is smaller
Bthe borrower pays a lower rate
Cthe loan has a longer tenor
Dthe borrower earns a higher yield
Answer & Solution
Correct answer: B. the borrower pays a lower rate
The IRR of a loan is the borrower's rate, so a greater IRR means a costlier loan.
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Related questions
The same return received later gives an IRR that is:If cash flows are random variables, as in a life annuity, IRR uses their:The AIRR approach of Magni was introduced to solve problems of:In personal finance the IRR measures what type of performance?With no capital constraint, which projects does a firm accept to maximize value?Mutually exclusive projects are those from which:The equivalent annuity method divides the NPV by what to annualize it?The equivalent annuity method is often used to compare projects of: