W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows NPV [Dollars Year Project w Project x 0$1,000-$1,500 $350 $500 $600 $750 $200 Project $400 400 $600 Project W 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. 810 12 16 18 20 COST OF CAPITAL IPercent A key to resolving this conflict is the assumed reinvestment rate. The NPV'calculation implicitly assumes that intermediate cash flows are reinvested at the assumes that the rate at which cash flows can be reinvested is the , and the IRR calculation As a result, when evaluating mutually exclusive projects, the s usually the better decision griterion