For mutually exclusive projects,the internal rate of return and the net present value give consistent accept/reject decisions if:
A)the net present value profiles for both projects do not intersect.
B)the required rate of return is less than the discount rate,which causes the net present value profiles of the two projects to intersect.
C)the investment projects have equal lives.
D)the investment projects have identical cash flows in the final year.

Question

Quizplus · Accepted Answer

When net present value profiles of mutually exclusive projects do not intersect, it indicates that only one project is profitable at any given discount rate. Similarly, if the internal rate of return method is used, the project with the higher IRR is chosen when the IRR profiles of the projects do not intersect. Therefore, both NPV and IRR methods will give consistent accept/reject decisions for mutually exclusive projects when their profiles do not intersect.

For Mutually Exclusive Projects,the Internal Rate of Return and the Net