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The IRR of Normal Project X Is Greater Than the IRR

question 159

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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 required rate of return.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:

Investment

The action or process of allocating resources, usually money, with the expectation of generating an income or profit.

Custom-Write

The process of writing content or software based on the specific requirements of a client or a project.

Prewritten Application

Software or programs that have been developed and are available for use without requiring customization.

Outsource

The practice of hiring third parties to perform tasks, handle operations or provide services that are either difficult to manage or outside the company's expertise.

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