Question: 1. Two mutually exclusive projects: IRR indicates that X is the better of the two, whereas NPV indicates that Y ist the better. X and

1. Two mutually exclusive projects: IRR indicates that X is the better of the two, whereas NPV indicates that Y ist the better. X and Y are not comparable. Project X costs only 10,000. We need to reinvestment 10,000 into X! The different assumptions about reinvestment result in the difference in ranking. (a) Reinvest at market rate. Which projekt would you prefer? (b) Reinvest at IRR. Which projekt would you prefer? (c) What is the important point here? Which reinvestment assumption is more acceptable

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