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If the IRR of Normal Project X Is Greater Than

question 78

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If the IRR of normal Project X is greater than the IRR of mutually exclusive (and also normal) Project Y, we can conclude that the firm should always select X rather than Y if X has NPV > 0.


Definitions:

Simple Interest

Interest calculated only on the principal amount of a loan or investment, not on any previously earned interest.

Account Balance

The total amount of money present in an account at a given point in time, considering all credits and debits.

Funds

Capital set aside for specific purposes or investments.

Present Value

Present value is a financial concept that represents the current value of a future amount of money or stream of cash flows, discounted at a specified rate of return.

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