Page 21 - FINAL CFA I SLIDES JUNE 2019 DAY 10

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!