Project A has an IRR of 20 percent while Project B has an IRR of 30 percent.Under which of the following situations might you be inclined to select Project A, assuming the projects to be mutually exclusive, lending projects?
A)Project A is more risky.
B)Project A requires a smaller initial investment.
C)Project A requires a larger initial investment.
D)Project A requires cash outflows in the final period.

Question

Quizplus · Accepted Answer

If Project A requires a larger initial investment, it might be preferred if the scale of the investment is significant enough to generate more total value despite a lower IRR.

Project a Has an IRR of 20 Percent While Project