When evaluating mutually exclusive projects,remember:
A) the project with the higher IRR may have the higher NPV at one discount rate and a lower NPV at another .
B) cash flows cannot be discounted when considering mutually exclusive projects.
C) mutually exclusive projects produce negative IRR values.
D) mutually exclusive projects always have multiple IRRs.

Question

Quizplus · Accepted Answer

The highest IRR project may not always have the highest NPV as the NPV is influenced by the discount rate used. Therefore, it is important to evaluate projects using both IRR and NPV to make informed decisions. Choices B, C, and D are incorrect as they either provide inaccurate information or are not relevant to the evaluation of mutually exclusive projects.

When Evaluating Mutually Exclusive Projects,remember