Assertion (a): When two or more investment proposals are mutually exclusive, ranking the proposals on the basis of IRR, NPV and PI methods may givecontradictory results.
Reason (R): The contradictory results in the ranking are due to differing dimensions relating to the scale of investments, cash flow patterns and project lives.
Indicate the correct answer:
A. Both (A) and (R) are true
B. (A) is true, but (R) is a necessary condition, but not a sufficient condition
C. Both (A) and (R) are false
D. Both (A) and (R) are true and (R) explains the reason sufficiently
Answer: Option B
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