[daneghosa]

Thanks for the response. Yes, they are actually mutually exclusive projects. The mystery for me here is, Ideally one would expect IRR to be higher when NPV is higher. But that’s not the case here. The IRR is lower for the one with higher NPV.

From experience which project would be ideal to choose for execution. If there any of the lectures that addresses this, kindly direct me as well.

[daneghosa]

Thanks Moffat. I found out that the formular “net investment /average annual operating cash flow” gives different values from when calculated manually using cumulative cash flow. Both for the simple cash flow and discounted cash flow.

[daneghosa]

What about a case a project has a higher NPV but lower IRR when compared to another project?

For example One project has NPV of €450,000 and an IRR of 7.5% while the other has NPV of €400,000 but an IRR of 15%.

[daneghosa]

Thanks Mofat

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