In general, the greater the difference between the magnitude and timing of cash inflows, the greaterthe likelihood of conflicting ranking between NPV and IRR.

Question

Quizplus · Accepted Answer

This statement is true. When there is a large difference between the timing and magnitude of cash inflows, NPV and IRR may generate conflicting rankings of investment projects. This is because NPV and IRR are sensitive to the timing of cash flows, and a large difference in timing can result in different rankings.

In General, the Greater the Difference Between the Magnitude and Timing