Project A has an IRR of 20% while Project B has an IRR of 30%.Under which of the following situations might you be inclined to select Project A,assuming the projects to be mutually exclusive,lending projects?
A) Project A is riskier.
B) Project A requires a smaller initial investment.
C) Project A requires a larger initial investment.
D)Project A requires cash outflows in the final period.

Question

Quizplus · Accepted Answer

If Project A requires a larger initial investment, it might generate a higher net present value (NPV) despite having a lower IRR, making it more attractive if maximizing NPV is the goal.

Project a Has an IRR of 20% While Project B