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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:

  1. Higher IRR, because it represents greater efficiency
  2. Higher NPV, to maximize shareholder wealth
  3. Lower IRR, because it likely has a lower risk profile

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