Question: Just One, Inc., has two mutually exclusive investment projects, P and Q, shown below. Suppose the market interest rate is 10 percent. The ranking of

Just One, Inc., has two mutually exclusive investment projects, P and Q, shown below. Suppose the market interest rate is 10 percent.

Just One, Inc., has two mutually exclusive investment projects, P

The ranking of projects differs, depending on the use of IRR or NPV measures. Which project should be selected? Why is the IRR rankingmisleading?

Initial Investment -$200.00 - 100.00 Project Year 1 $140.00 80.00 Year 2 IRR NPV (r-10%) 533.26 19.21 $128.25 22.4% 56.25 25.0

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