The main reason that the NPV method is regarded as being conceptually superior to the IRR method, for the purpose of evaluating mutually exclusive investments, is that mutually exclusive projects have multiple IRRs.

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The main reason NPV is considered superior is that it directly measures the increase in value to the firm and does not rely on the reinvestment rate assumption that IRR does. Multiple IRRs are a separate issue that can occur with non-conventional cash flows.

The Main Reason That the NPV Method Is Regarded as Being