If the IRR of normal Project X is greater than the IRR of mutually exclusive (and also normal)Project Y, we can conclude that the firm should always select X rather than Y if X has NPV 0.

Question

If the IRR of normal Project X is greater than the IRR of mutually exclusive (and also normal)Project Y, we can conclude that the firm should always select X rather than Y if X has NPV > 0.

Quizplus · Accepted Answer

We do not know if the cost of capital is to the right or left of the crossover pointrue.therefore, NPVX may be either higher or lower than NPVY.

If the IRR of Normal Project X Is Greater Than