alleryStart learning →Project X has a lower IRR but a higher NPV than mutually exclusive Y, no capital limit. Choose:
AY, higher IRR
BNeither project
CBoth X and Y
DX, higher NPV
Answer & Solution
Correct answer: D. X, higher NPV
Without capital constraints the aim is to maximise shareholder wealth, which the higher NPV project does.
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Related questions
The same return received later gives an IRR that is:If cash flows are random variables, as in a life annuity, IRR uses their:The AIRR approach of Magni was introduced to solve problems of:In personal finance the IRR measures what type of performance?With no capital constraint, which projects does a firm accept to maximize value?Mutually exclusive projects are those from which:The equivalent annuity method divides the NPV by what to annualize it?The equivalent annuity method is often used to compare projects of: