Question: Just One, Inc., has two mutually exclusive invest projects, P and Q, shown below. Suppose the market interest rate is 10 percent. Project P Initial
Just One, Inc., has two mutually exclusive invest projects, P and Q, shown below. Suppose the market interest rate is 10 percent. Project P Initial Investment: -$200.00 Year 1: $140.00 Year 2: $128.25 IRR: 22.4% NPV (R=10%) $33.26 Project Q: Initial Investment: $-100.00 Year 1: $80.00 Year 2: $56.25 IRR: 25.0% NPV (r=10%): $19.21 The ranking of projects differes, depending on the use of IRR or NPV measures. Which project should be selected? Why is the IRR Ranking misleading
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