What circumstances would the other project be undertaken

Reference no: EM133206902

Assignment - NPV and IRR Questions

Suppose you are a financial manager and you have the following information on two projects:

	Project Alpha	Project Beta
NPV	$34,670	$1,500
IRR (required rate of return is 10%)	12.4%	10.6%
Payback Period	6 years	2 years

Required -

1. If the projects are mutually exclusive, is there a clear best option to which project should be undertaken? Why or why not?

2. Which option is the financial manager likely to choose? Why?

3. Under what circumstances would the other project be undertaken?

4. Identify at least two circumstance in which the other project may be undertaken, and identify any considerations with the IRR methodology compared to the NPV methodology.

Reference no: EM133206902

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