Scenario: Two mutually exclusive projects are being considered. First, a short-term project (a project which most of its cash inflows come in relatively soon) may have a higher ranking under NPV if the cost of capital is high (NPV Decision rules mutually exclusive projects: Accept the project with the highest positive NPV). However, a long-term project (a project which has more total cash inflows, but most are realized in later years) may be better if the cost of capital is low. Why?
Also, would changes in the cost of capital create a change in the IRR ranking of these two projects. Is this a correct statement?