D Question 1 1 pts You are investigating two mutually exclusive investment proje

Question

D Question 1 1 pts You are investigating two mutually exclusive investment projects for the firm, project A and project B. After your analysis you find that the IRRA>IRRg, but that the NPVA NPVg Given this information you should: O Choose neither project because of conflicting results O Choose both projects as the results indicate either will work: O Choose B because IRR results are not conclusive with mutually exclusive projects O Choose A because NPV results are not conclusive with mutually exclusive projects O See if you casn get a difterent job because you bave no idea what you are doing

Explanation / Answer

Option C is correct (Choose B because IRR results re not conclusive with mutually exclusive projects.
because since it is mutually exclusive project only one project has to be selected. Hence bot can't be selected. NPV is better indicator than IRR because NPV assumes cash flows to be reinvested at rate of WACC whereas IRR assumes cash flow to be reinvested at IRR rate which is higher than WACC. Hence NPV results are more conclusive than IRR in choosing between mutually exclusive Projects.

Best of Luck. God Bless

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