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Part II: Evaluation of Projects under Conditions of Unchanging Risk Two of the most widely used methods of evaluating capital investment projects are the net

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Part II: Evaluation of Projects under Conditions of Unchanging Risk Two of the most widely used methods of evaluating capital investment projects are the net present value (NPV) technique and the internal rate of return (IRR) method When two or more mutually exclusive investments are being evaluated, conflicts car arise between the rankings given the projects by NPV and IRR. The questions below point to potential difficulties that can arise. Consider the following two mutually exclusive investment proposals,13 which are graphed below

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