Projects $W$ and $x$ are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows.

If the weighted average cost of capital $($WACC$)$ for each project is $6\%,$ do the NPV and IRR methods agree or conflict?

The methods agree.

The methods conflict.

A key to resolving this conflict is the assumed reinvestment rate. The IRR calculation assumes that intermediate cash flows are reinvested at the

$,,$ and the NPV calculation implicitly assumes that the rate at which cash flows can be reinvested is

the

As a result, when evaluating mutually exclusive projects, the NPV method grad is usually the better decision criterion.