When using the internal rate of return (irr) investment rule, we compare:

a. the average return on the investment opportunity to returns on all other investment opportunities in the market?

the answer to this question is option b. b. the average return on the investment opportunity to returns on other alternatives in the market with equivalent risk and maturity The basic definition of the IRR rule states that if the internal rate of return (IRR) on a project or an investment is greater than the minimum required rate of return then the project or investment should be pursued. Conversely, if the IRR on a project or investment is lower than the cost of capital, then the best course of action may be to reject it. So it only compares the alternative of equivalent risk rather than all returns