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which of the following statements is not true? The NPV and IRR may rank projects differently

which of the following statements is not true? The NPV and IRR may rank projects differently

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Answer #1

The statement The NPV and IRR may rank projects differently, is TRUE

This is because the assumptions for both the criteria's differ. NPV assumes that the cash flows of the projects are reinvested at the discount rate for the project, while IRR assumes that the cash flows of the project are reinvested at the internal rate of return (IRR) itself. which is not a realistic assumption.

Also, the pattern of cash flows makes NPV and IRR evaluation to differ.

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