6. Understanding the NPV profile If profects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will agree, Projects W and X are rutually exclushe projects. Their cash flows and NPV profiles are shown as follows. The methods conflict. The methods agree. When there is a conflict, a kev to resolvino this it b the assumed reinventment rate. The NPV calculation implicitly assumes that intermediate cash fows are reinvested at the be reinyested is the , and the IRR calculation assumes that the rate at which cash flows can As a result, when evaluating mutually exdusive projects, the is usually the better decision criterion