Final answer:
When the IRR exceeds the hurdle rate, the NPV of an investment is positive, meaning the investment will add value to the company and is considered acceptable.
Step-by-step explanation:
If the Internal Rate of Return (IRR) exceeds the hurdle rate, the Net Present Value (NPV) is positive. The hurdle rate is commonly understood as the minimum rate of return that an investment must achieve to be considered acceptable. The IRR is the discount rate that makes the NPV of all cash flows from a particular project equal to zero. If the IRR is higher than the hurdle rate, it means that the investment is expected to generate returns higher than the minimum threshold set by the hurdle rate, leading to a positive NPV, indicating that the investment will add value to the company.