{"id":33685,"date":"2024-04-15T09:20:17","date_gmt":"2024-04-15T09:20:17","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=33685"},"modified":"2024-04-15T09:20:17","modified_gmt":"2024-04-15T09:20:17","slug":"the-conflicts-in-project-ranking-in-capital-budgeting-as-per-npv-and-irr-may-arise-because-of","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/the-conflicts-in-project-ranking-in-capital-budgeting-as-per-npv-and-irr-may-arise-because-of\/","title":{"rendered":"The conflicts in project ranking in capital budgeting as per NPV and IRR may arise because of"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a9928a3d4e4d\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    Size disparity                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    Time disparity                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    Life disparity                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"true\">\r\n                    All of these                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: D. All of these.<\/p>\n<p>NPV and IRR are both capital budgeting methods that are used to evaluate the profitability of a project. However, they can sometimes lead to different rankings of projects. This is because NPV takes into account the time value of money, while IRR does not. As a result, projects with larger cash flows in the early years may be ranked higher by NPV than by IRR. Additionally, projects with different lives may be ranked differently by NPV and IRR. This is because NPV takes into account the entire cash flow stream of a project, while IRR only takes into account the cash flows that occur after the project has been paid off. As a result, projects with shorter lives may be ranked higher by IRR than by NPV.<\/p>\n<p>In general, NPV is considered to be a more reliable capital budgeting method than IRR. This is because NPV takes into account the time value of money, while IRR does not. Additionally, NPV is not as sensitive to <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> changes in the discount rate as IRR. However, IRR can be a useful tool for comparing projects with different cash flow profiles.<\/p>\n<p>Here is a more detailed explanation of each option:<\/p>\n<ul>\n<li><strong>Size disparity:<\/strong> Projects with different sizes may be ranked differently by NPV and IRR. This is because NPV takes into account the time value of money, while IRR does not. As a result, projects with larger cash flows in <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> the early years may be ranked higher by NPV than by IRR.<\/li>\n<li><strong>Time disparity:<\/strong> Projects with different cash flow profiles may be ranked differently by NPV and IRR. This is because NPV takes into account the entire cash flow stream of a project, while IRR only takes into account the cash flows that occur after the project has been paid off. As a result, projects with shorter lives may be ranked higher by IRR than by NPV.<\/li>\n<li><strong>Life disparity:<\/strong> Projects with different lives may be ranked differently by NPV and IRR. This is because NPV takes into account the time value of money, while IRR does not. As a result, projects with longer lives may be ranked higher by NPV than by IRR.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[700],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The conflicts in project ranking in capital budgeting as per NPV and IRR may arise because of<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/the-conflicts-in-project-ranking-in-capital-budgeting-as-per-npv-and-irr-may-arise-because-of\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" 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