Question

If two mutually exclusive projects have conflicting

Q: Answer-If two mutually exclusive projects have conflicting rankings under NPV and IRR, which method should...

NPV is superior since it measures absolute value creation and assumes reinvestment at cost of capital. IRR may mislead in mutually exclusive projects.

rankings under NPV and IRR, which method should be preferred?

A IRR, since it is a percentage return.

B NPV, as it measures absolute wealth maximisation.

C Either can be used.

D Payback should be considered instead.

E Choose based on lower risk.

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If two mutually exclusive projects have conflicting

Solution