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City and Regional Planning QUESTION #5020
Question 1
In project appraisal, if Internal Rate of Return (IRR) is 8% and discount rate is 10%, the project is:
  • Economically viable
  • Economically not viable✔️
  • Break-even
  • Requires subsidy
Correct Answer Explanation
IRR is the discount rate where NPV = 0. For viability, IRR must exceed the opportunity cost of capital (discount rate). IRR (8%) < discount rate (10%) means project returns less than alternative investments—economically unviable without considering non-monetary benefits.