It is possible for a project with a higher IRR to yield less

It is possible for a project with a higher IRR to yield less in absolute dollars?

True

False

Solution

It is possible for a project with a higher IRR to yield less in absolute dollars.

Answer:- True.

Explanation:- Yes, It is possible for a project with a higher IRR to yield less in absolute dollars because IRR provides a relative measure of value. IRR does not provide an absolute measure. IRR does not take into account the scale of investment. While one investment project may have higher rate of profit per unit of capital invested than another investment project, if it has fewer units of capital invested in it, it may make a smaller contribution to the wealth of the firm. Thus, it is possible for an investment project with a higher IRR to yield less in absolute dollars.

Conclusion:- The Statement given in the question is true.