1. She decides to use the IRR method first. She wants to see which project is better according to the IRRs. After some calculations, she finds that one project looks better than the other when IRRs are compared. Which project is she talking about?
2. Is an IRR an acceptable method to compare two mutually exclusive projects?
3. Is NPV an acceptable method when comparing two mutually exclusive projects?
4. Later, she visits Faizan and talks about her findings. Faizan, a colleague, recommends she to checks the NPVs also. What does she find? Do NPVs confirm her earlier findings?

5. Are both methods (i.e. NPV and IRR) good in these situations? What would you do if you were the one in Sinnings position? According to your opinion, which project is better for this company?

Making the Decision Sinning estimates the cash flows of the two projects for the next 3 years as follows: Expected Cash flows associated with the two projects Time Project 1 Project 2 0 (20 million) (30 Million) 1 12 million 5 million 2 8 Million 15 million 3 5 million 20 million She was told by her manager that similar projects that the company has carried out before had a required rate of return of 12%, so she decided to use the same rate of return