7. Understanding conflicts between methods Aa Aa If mutually exclusive projects with normal cash flows are being analyzed, the net present value (NPV) and internal rate of return (IRR) methods never agree. Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows NPV Dollars) 800 Year Project Y Project z 0 $1,500 $1,500 $900 $600 $600 $300 4$%1,000 $200 $200 600 Project Y $400 400 Project 7 200 If the weighted average cost of capital (WACC) for each project is 2%, do the NPV and IRR methods agree or conflict? 200 O The methods conflict O The methods agree. 0 2 4 6 10 12 14 16 10 20 COST OF CAPITAL Percent)