Comparing net present value and internal rate of return ________.
A) always results in the same ranking of projects
B) always results in the same accept-reject decision
C) may give different accept-reject decisions
D) is only necessary on independent projects

Question

Quizplus · Accepted Answer

Net present value and internal rate of return are both capital budgeting techniques used to evaluate different investment opportunities. While both NPV and IRR take into account the time value of money, they differ in their approach and assumptions. As a result, they may lead to different accept-reject decisions, especially when comparing mutually exclusive projects. Therefore, it is important to use both techniques together and exercise judgment in making investment decisions.

Comparing Net Present Value and Internal Rate of Return ________