Hi all, I have a question regarding Schweser Prac Exam 1 on pg 85, Q77. I don’t really understand between B and C. Choice C can also be the correct answer since it is a mutually exclusive project but yet the answer is B. Can someone enlighten me on this… Thank you.
Since it’s mutually exclusive (can only choose one project), the Company should always choose Jones (it has the higher NPV because CFs come earlier) but if the discount rate is greater than the IRR, the project should be rejected. Does that help?