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10. Explain what is meant by ‘mutually exclusive projects’ and why it is generally a bad...

10. Explain what is meant by ‘mutually exclusive projects’ and why it is generally a bad idea to use IRR to choose between mutually exclusive projects?

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Answer #1

Mutually Exclusive projects are projects when one of the projects is to be chosen between 2 or more projects.

IRR is bad because Higher NPV project might have lower IRR. Moreover IRR might make the investor to accept project with lower NPV.

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