do firms always follow the irr rule 
the irr rule may not always be rigidly enforced generally the higher the irr the better however a company may prefer a project with a lower irr as long as it still exceeds the cost of capital that s because it has other intangible benefits such as contributing to a bigger strategic plan or impeding competition companies ultimately consider several factors when deciding whether to proceed with a project there may be factors that outweigh the irr rule the bottom lineit s important to weigh all your options and determine if a project or investment is worth the risk or reward this applies whether you re an individual investor or if you run a company one way to ascertain this is to follow the internal rate of return rule this rule states that you should only take on a new venture if its irr exceeds the breakeven point if it s lower you may want to reconsider whether it s worth the investment 