If there is a conflict between mutually exclusive projects due to the IRR,one should:
A) drop the two projects immediately.
B) spend more money on gathering information.
C) depend on the NPV as it will always provide the most value.
D) depend on the payback because it does not suffer from these same problems.
E) None of these.

Question

Quizplus · Accepted Answer

The Net Present Value (NPV) method is generally preferred over the Internal Rate of Return (IRR) when evaluating mutually exclusive projects because NPV provides a direct measure of the added value to the firm and is not affected by the scale of the project or differing cash flow patterns.

If There Is a Conflict Between Mutually Exclusive Projects Due