Question: 3. (8 Points) Two mutually exclusive projects: IRR indicates that X is the better of the two, whereas NPV indicates that Y ist the better.

3. (8 Points) 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. (a) (2 Points) Reinvest at market rate. Which project would you prefer? (b) (3 Points) Reinvest at IRR. Which project would you prefer? (c) (3 Points) What is the important point here? Which reinvestment assumption is more acceptable? 3. (8 Points) 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. (a) (2 Points) Reinvest at market rate. Which project would you prefer? (b) (3 Points) Reinvest at IRR. Which project would you prefer? (c) (3 Points) What is the important point here? Which reinvestment assumption is more acceptable

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