Question

If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will ______ agree

Answer 1

If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will _always_ agree.

NPV is the abbreviation of Net present value which is a financial metric that seeks to capture the total value of an investment opportunity.

For mutually exclusive projects, if the IRR or internal rate of return is greater than the cost of capital, you accept the project. If it is less than the cost of capital, then you reject the project.

Also, If projects are mutually exclusive, accept the one with the highest IRR or internal rate of return by assuming it is above the hurdle rate.

Therefore, the answer is always.

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