With independent projects, NPV and IRR provide identical accept/reject decisions. If, however, you have two mutually exclusive projects to evaluate, the most accurate thing you could say about the eventual results is that:
A) NPV and IRR may give conflicting rankings
B) NPV and IRR never give the same rankings
C) NPV and IRR always give the same rankings
D) IRR is more lenient in accepting

Question

Quizplus · Accepted Answer

When comparing two mutually exclusive projects with different cash flow patterns, NPV and IRR can give conflicting rankings. This is because NPV assumes that cash flows are reinvested at the cost of capital, while IRR assumes they are reinvested at the project's own internal rate of return. As a result, NPV is generally considered more accurate for project evaluation.

With Independent Projects, NPV and IRR Provide Identical Accept/reject Decisions