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If mutually exclusive projects are proposed that both have an IRR greater than the necessary WACC, the IRR method states that the firm should accept: A. the project with the greater future cash inflows,
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If mutually exclusive projects are proposed that both have an IRR greater than the necessary WACC, the IRR method states that the firm should accept:

A. the project with the greater future cash inflows, assuming that both projects have the same risk as the firm's average project.

B. the project with the greatest IRR, assuming that both projects have the same risk as the firm's average project.

C. The project tha trequires the lowest initial investment, assuming that both projects have the same risk as teh firm's average project

User Brian HK
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5 votes

Answer:

Option B is correct one.

The project with the greatest IRR, assuming that both projects have the same risk as the firm's average project.

Step-by-step explanation:

If mutually exclusive projects are proposed that both have an IRR greater than the necessary WACC, the IRR method states that the firm should accept: The project with the greatest IRR, assuming that both projects have the same risk as the firm's average project.

If the mutually exclusive projects have IRR greater than the WACC and the risk of the both is same then the company should accept the project with greater IRR as per IRR methodology.

User Marisha
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