Question 6
3 points
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Your company is considering two mutually exclusive projects and can only proceed with one of them. The first project has an IRR of 20% and a NPV of
$10,000. The second project has an IRR of 18%, and a NPV of $12,000. If the required rate of return for the company is 16%, which project makes the most
financial sense and why?
1. the first project since the IRR is the most commonly used investment criteria
2. the second project since NPV directly measures the increase in value to a company
3. the second project since the NPV considers several investment criteria
4. the first project since the IRR directly measures the increase in value to the company