Explain under what circumstances the NPV and IRR could provide different decisions.

Question

Question

Answer 1

Answer #1

There can be conflicting results with NPV and IRR, both can provide different decisions.

1. Difference in Project Scale: When both the projects may have different initial costs.

2. Difference in Cash flow timings: The difference may be because both the projects may be difference in cash flow timings

3. Difference in Horizon: When the time horizon for the investment projects when they different.

Answer 2

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