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Author Question: For mutually exclusive projects the underlying cause of conflicts in ranking for projects by ... (Read 139 times)

jake

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Question 1

Comparing net present value and internal rate of return analysis
◦ always result in the same ranking of projects.
◦ always result in the same accept/reject decision.
◦ may give different accept/reject decisions.
◦ is only necessary on mutually exclusive projects.

Question 2

For mutually exclusive projects the underlying cause of conflicts in ranking for projects by internal rate of return and net present value methods is
◦ the reinvestment rate assumption regarding cash flows.
◦ that neither method explicitly considers the time value of money.
◦ the assumption made by the IRR method that intermediate cash flows are reinvested at the cost of capital.
◦ the assumption made by the NPV method that intermediate cash flows are invested at the internal rate of return.


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Marked as best answer by jake on Apr 25, 2021

fatboyy09

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jake

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Reply 2 on: Apr 25, 2021
Excellent


billybob123

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

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