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Given a 5-year Project Ss NPV is $328 and its IRR is 13%; and another 5-year Project Ls NPV is $314 and its IRR is 14%. Ass
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Ans C) Net present value or NPV is calculated by discounting the future cash flows and then substracting the initial investment. NPV = present value of inflows - initial investment. Internal rate of return or IRR is used to rank the projects of the basis of rate of return on investment that is calculated by equating the present value of inflows with outflows. In the case of mutually exclusive projects where there is a difference in size or the timing of cash inflows than in this case NPV is more suitable. Hence NPV is a better method to predict profitability.Hence answer is option C because project S has higher NPV than project L

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