conflict will exist between the NPV and IRR methods, when used to evaluate two equally risky but mutually exclusive projects, if the projects' cost of capital exceeds the rate at which the projects' NPV profiles cross.

Question

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When the cost of capital exceeds the rate at which the projects' NPV profiles cross, the IRR method may suggest the project with the higher IRR is the better investment, while the NPV method may suggest the project with lower IRR but higher NPV is the better investment. This creates a conflict between the two methods.

Conflict Will Exist Between the NPV and IRR Methods, When