Question
The Internal Rate of Return of Project B is 12.96%. If Projects A and B are mutually exclusive, considering only at the IRR method, which
The Internal Rate of Return of Project B is 12.96%. If Projects A and B are mutually exclusive, considering only at the IRR method, which project(s) should Big Company proceed with?
a. Project "A" should be chosen because the IRR of Project "A" is less than that of Project "B", indicating that Project "A" is a more efficient use of capital.
b. Project "B" should be chosen because the IRR of Project "B" is greater than that of Project "A", indicating that Project "B" has a higher return.
c. Both Projects should be chosen because both Projects has IRR's > WACC, which indicates that both projects have acceptable returns.
d. Neither Project should be chosen because both Projects have IRR's > WACC, which indicates that both projects are an inefficient use of capital. e. None of the above answers are correct.
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