Ask Question
19 February, 14:39

AB When considering two mutually exclusive projects, the firm should always select the project whose internal rate of return is the highest, provided the projects have the same initial cost. This statement is true regardless of whether the projects can be repeated or not.

+5
Answers (2)
  1. 19 February, 15:08
    0
    False

    Explanation:

    If an investment project can be repeated, i. e. its life cycle can be extended by reinvesting, the NPV of the project will change.

    When considering two mutually exclusive projects, the NPV method should always be considered before the IRR as a means of evaluating which project should be carried out.
  2. 19 February, 16:49
    0
    Answer: The statement is false, since the NPV will definitely change with time or when repeated.

    Explanation: NPV (net present value) : this refers to the cash flow at different times, it is usually expressed in monetary values such as in dollar whose value may not be stable, hence the possibility of change that may not be favorable.

    IRR (internal rate of return); this is expressed in percentage and it used as a measurement of cash flows when executing projects. This metric does not give details in actual monetary terms. So it is better to consider using the NPV as the priority.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “AB When considering two mutually exclusive projects, the firm should always select the project whose internal rate of return is the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers