Economics · Capital Budgeting
Conflict in ranking between Net Present Value (NPV) and Internal Rate of Return (IRR) methods for mutually exclusive projects may primarily arise due to:
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- 1Absence of reinvestment assumptions in capital budgeting
- 2Exclusive dependence of NPV on accounting profits
- 3Inability of IRR to compute discount rates
- 4Differences in project scale or the timing of expected cash flows✓
Correct answer
Differences in project scale or the timing of expected cash flows
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