Conflicts Between Two Mutually Exclusive Projects Occasionally Occur,where the NPV

question 61

True/False

Conflicts between two mutually exclusive projects occasionally occur,where the NPV method ranks one project higher but the IRR method puts the other one first.In theory,such conflicts should be resolved in favor of the project with the higher IRR.

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Definitions:

Partnership

A partnership is a legal form of business operation between two or more individuals who share management and profits.

Generally Accepted Accounting Principles

The standard framework of guidelines for financial accounting used in any given jurisdiction.

Salary Allowance

A mechanism for dividing earnings of a partnership based on personal services provided by the partners (not an expense).

Interest Allowance

A mechanism for dividing earnings of a partnership based on a percentage of capital balances of the partners (not an expense).