Just One, Inc. has two mutually exclusive investment projects P & Q, given below. Assume interest rate is 10%.
Project Investment Year 1 Year 2 IRR NPV(r=10%)
P -200.00 140 128.25 22.4% 33.26
Q -100.00 80.00 56.25 25.0% 19.21
Ranking of projects differs on use of IRR or NPV measures. Which project must be chosen? Describe why the IRR ranking is misleading?