Comparing the NPV profile of an investment project to that of a financing project demonstrates why the:
A)incremental IRR is computed differently for financing projects than for investment projects.
B)IRR decision rule for investment projects is the opposite of the rule for financing projects.
C)life span of a project affects the decision as to which project to accept.
D)NPV rule for financing projects is the opposite of the rule for investment projects.
E)profitability index and the net present value are related.

Question

Quizplus · Accepted Answer

The IRR decision rule is reversed for financing projects compared to investment projects because the cash flow patterns are opposite, leading to different interpretations of the IRR.

Comparing the NPV Profile of an Investment Project to That