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Frank is right.

The short answer is that you need to compare the IRR to the average Cost of capital

The cost of capital is a term used in the field of financial investment to refer to the cost of a company's funds (both debt and equity), or, from an investor's point of view "the shareholder's required return on a portfolio of all the company's existing securities".[1] It is used to evaluate new projects of a company as it is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet.
It is an average of the yield of the company's bonds and the implied return on its equity shares which should be higher than that of bonds but is harder to estimate (the yields on bonds is just a market quotation).

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 25th, 2011 at 08:19:28 AM EST
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