Projects A and B are mutually exclusive lending projects. Project A has an IRR of 20% while Project B has an IRR of 30%. You would be most apt to select Project A if:
A) Project B has a longer life than Project A.
B) Project A has more risk than Project B.
C) Project A is twice the size of Project B.
D) Project B has a larger cash inflow in Year 1 than Project A.

Question

Quizplus · Accepted Answer

If Project A is twice the size of Project B, the larger scale of Project A might result in a higher total return, despite its lower IRR.

Projects a and B Are Mutually Exclusive Lending Projects