The net present value method and the internal rate of return method may produce different decisions when selecting among mutually exclusive projects. What is the source of this conflict?
The net present value method and the internal rate of return method may produce different decisions when selecting among mutually exclusive projects. What is the source of this conflict?
The differing reinvestment assumptions: the NPV method assumes reinvestment at the cost of capital; the IRR method assumes reinvestment at the IRR.