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The following information is available for two projects.
Project A Project B
IRR 16% 17%
DPP 3.6 4.1
NPV $18300 $16900which two of the following are correct.
1-Project A should be accepted bcoz it has the higher NPV
2-project B should be accepted bcoz it has the higher IRR
3-At a cost of capital 17% project B would have a zero NPV
4-Ranking the project based on DPP would make project B more favourablePlease do not simply set test questions and expect an answer.
You must have an answer in the same book in which you found the question, so you should ask about whatever it is in the answer that you are not clear about and then I will help you.I assume that by ‘DPP’ you mean the discounted payback period (it is not a standard acronym and it will certainly not be referred to as ‘DPP’ in the exam!).
If you have watched my free lectures, you will know that (1) is true and that (3) is true.
The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.Thank you 🙂
Next time I’ll care about that Sir.
& because of option No 2 I asked the whole question.
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