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    Question

    Project A has NPV ₹8 lakh, IRR 15%. Project B has NPV

    ₹6 lakh, IRR 17%. If cost of capital is 12%, and projects are mutually exclusive, which should be chosen?
    A Project B because of higher IRR Correct Answer Incorrect Answer
    B Project A due to higher NPV Correct Answer Incorrect Answer
    C Reject both projects Correct Answer Incorrect Answer
    D Choose project with shorter payback Correct Answer Incorrect Answer

    Solution

    NPV is the superior measure when choosing between mutually exclusive projects.

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