About investment criteria. We have discussed about five
investment criteria, including NPV, IRR, PI, AAR and Payback.
a) Given that three projects are mutually exclusive and their
information is as follows, which project to choose and
why?
Project A
Project B
Project C
NPV
$500,000
$200,000
$300,000
IRR
12%
15%
18%
PI
1.5
2.0
1.6
b) Which two investment criteria do NOT take time value of money
into the consideration?
c) List two exceptional cases that IRR is not reliable