How ranking of projects differs by irr or npv measures


Just One, Inc. has two mutually exclusive investment projects P & Q, given below. Assume interest rate is 10%.

Project Investment Year 1 Year 2 IRR NPV(r=10%)
P -200.00 140 128.25 22.4% 33.26
Q -100.00 80.00 56.25 25.0% 19.21

Ranking of projects differs on use of IRR or NPV measures. Which project must be chosen? Describe why the IRR ranking is misleading?

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Project Management: How ranking of projects differs by irr or npv measures
Reference No:- TGS031980

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