The IRR of Normal Project X Is Greater Than the IRR

question 47

True/False

The IRR of normal Project X is greater than the IRR of normal Project Y, and both IRRs are greater than zero.Also, the NPV of X is greater than the NPV of Y at the cost of capital.If the two projects are mutually exclusive, Project X should definitely be selected, and the investment made, provided we have confidence in the data.Put another way, it is impossible to draw NPV profiles that would suggest not accepting Project X.

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Definitions:

Standard Deviation

A measure of the amount of variability or dispersion of a set of data values, illustrating how much individual data points deviate from the mean.

Variable

Any characteristic, number, or quantity that can be measured or quantified.

Normally Distributed

Describes a distribution that follows a normal curve or bell-shaped pattern, where most of the data points are close to the mean.

Standard Deviation

Standard Deviation is a measure of the amount of variability or dispersion around the mean value of a set of data.