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Corporate Issuers
Corporate Issuers
Medium
Ridgeline Mining is evaluating two mutually exclusive projects. Project Peak has an IRR of 32% and NPV of $82,300, while Project Valley has an IRR of 22% and NPV of $97,600 (both at a 10% cost of capital). The company should most likely choose:
A
Project Valley, because NPV is the superior decision criterion for mutually exclusive projects
B
Project Peak, because a higher IRR always indicates a more profitable investment
C
Both projects, because both have positive NPV and exceed the cost of capital
D
Neither project, because the conflicting signals suggest unreliable analysis
Select an answer to continue
Tags
#npv-vs-irr
#mutually-exclusive
#capital-budgeting
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CFA Level I — Corporate Issuers Practice Question | AcadiFi | AcadiFi