2 4 6 8 10 12 14 COST OF CAPITAL (Percent) 16 18 20 eer Center - Feedback If the required rate of return for each project is 10%, do the NPV and IRR methods agree or conflict? O The methods conflict. O The methods agree. A key to resolving this conflict is the assumed reinvestment rate. The NPV calculation implicitly assumes that intermediate cash flows are reinvested at the , and the IRR calculation assumes that the rate at which cash flows can be reinvested is the As a result, when evaluating mutually exclusive projects, the is usually the better decision criterion. Grade It Now Save & Continue Continue without having ccess 200 024 6 8 10 12 14 COST OF CAPITAL (Percent) 16 nter ack If the required rate of return for each project is 10%, do the NPV and IRR methods agree or conflict O The me modified internal rate of return (MIRR) The me internal rate of return (IRR) required rate of return A key to resolving reinvested at the It rate. The NPV calculation implicitly assumes that intermediate cash flows are and the IRR calculation assumes that the rate at which cash flows can be reinvested is the As a result, when evaluating mutually exclusive projects, the is usually the better decision criterion Grade It Now Save & Continue Continue without saving o e a 6 uccess 200 COST OF CAPITAL (Percent enter back If the required rate of return for each project is 10%, do the NPV and IRR methods agree or conflict? O The methods conflict. The methods agree. A key to resolving this conflict is the assumed reinvestment rate. The NPV calculation implicitly assumes that intermediate cash flows are reinvested at the IRR method IRR calculation assumes that the rate at which cash flows can be reinvested is the NPV method As a result, when evaluating mutually exclusive projects, the is usually the better decision criterion. Grade It Now Save & Continue Continue without saying O emas @ @ @