Page 23 - FINAL CFA SLIDES DECEMBER 2018 DAY 11

Session Unit 10:
35. Capital Budgeting

Conflicting Project Rankings, p.31
Project X has a higher IRR, but Project Y has a

higher NPV. Which is the better project?

Project Y is the better project: NPV measures the
expected increase in wealth from undertaking a

project, NPV is the only acceptable criterion when
tanties
ranking projects.

The “Multiple IRR” and “No IRR” Problems, p.32

These stem from unconventional cash flows, hence NPV
superior as you cannot not have an NPV!