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 the above.

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 expected increase in value to the firm, while IRR can sometimes give misleading results due to its reinvestment rate assumption and multiple IRR issues.

If There Is a Conflict Between Mutually Exclusive Projects Due