hard · CFA Level I Corporate Issuers
Oakridge Capital is evaluating two mutually exclusive projects. Project A has an IRR of 15% and a smaller scale. Project B has an IRR of 12% and a larger scale.
If the cost of capital is 8%, Oakridge should choose the project with the:
- Higher IRR, because it represents greater efficiency
- Higher NPV, to maximize shareholder wealth
- Lower IRR, because it likely has a lower risk profile
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