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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
      E None of these Correct Answer Incorrect Answer

      Solution

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

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