MndTap Cengage L ng.cengage.coms mbld 5728278nbNodeld-207595027&deploymentlid-55

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MndTap Cengage L ng.cengage.coms mbld 5728278nbNodeld-207595027&deploymentlid-55165130174650501190349062eISIN; 9781305635975r1sparenb MINDTAP Assignment 11-The Basics of Capital Budgeting O Due on Dec 3 at 11 PM CST tr mubually exclusive projects with normal cash flows are being analyzed, the net present value (NPv) and internal rate of return (IRR) methods agree sometimes always Projects Y and Z are mutuallyacrsweproects. Their cash flows and NPV profles are shown as folows NPV IDelars 800 Year Project Y Project Z 0$1,500 -$1,500 200 $900 $400 $600 $600 $300 4 $1,000$200 400 Project y 400 Project Z 200 If the weighted average cost of capital (WACC) for each project is 2%, do the NPV and IRR methods agree or conflict? -200 O The methods conflict O The methods agree. 0244810 12 14 16 18 2 COST OF CAPITAL (Percent Desktop

Explanation / Answer

These methods Conflict because Project Y IRR is low and NPV is High.

NPV assumes Cost of Capital, IRR assumes IRR

NPV method is best in case of Mutually exclusive projects

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