Question

Imagine that two mutually exclusive projects have yielded NPV, PI, and IRR estimations as shown in the table below:

Decision Method	Project SDX	Project TGL
NPV	$2,100.87	$2,099.13
PI	1.68	1.44
IRR	14.56%	19.76%

Suppose that the minimum required rate of return is 10.00% for both projects. Based on the capital budgeting decision methods presented in the data table above, determine the better alternative project to invest in.

Group of answer choices

1) Project TGL

2)Project SDX

3)Neither one of the projects

4) Both of the projects

Answer 1

In the case of Mutually exclusive Projects when there is a conflict between  IRR and NPV decision rules accept the project that gives maximum NPV. Higher PI suggests with less initial investment we get get high NPV.

In this Case Accept Project SDX