Conflicts between two mutually exclusive projects occasionally occur, where the

Question

Conflicts between two mutually exclusive projects occasionally occur, where the NPV method ranks one project higher but the IRR method puts the other one first. In theory, such conflicts should be resolved in favor of the project with the higher IRR. a. true b. false Conflicts between two mutually exclusive projects occasionally occur, where the NPV method ranks one project higher but the IRR method puts the other one first. In theory, such conflicts should be resolved in favor of the project with the higher IRR. a. true b. false

Explanation / Answer

b. False...IRR is baised towards projects with early cash flows or smalll investments...NPV should be used as the basis to comapre them...Higher NPV should be used!!!

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