The IRR and NPV decisions are consistent with each other when a project's cash flows follow a conventional pattern.

Question

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When a project's cash flows follow a conventional pattern, the IRR and NPV decisions usually give the same result. However, if the cash flows are non-conventional, such as multiple IRRs or cash flow sign changes, the IRR may not be a reliable indicator of profitability, and the NPV should be used instead.

The IRR and NPV Decisions Are Consistent with Each Other