Discuss how and why the above two methods conflict in their ranking of investment projects and seek how such conflicts are resolved?

The two methods used to rank investment projects, NPV and IRR, are based on different criteria and often result in conflicting rankings. NPV looks at the total present value of a project’s cash flows, while IRR is focused on the return of an investment within a certain period of time. Since these two metrics measure different things, it is possible for a lower-ranking project according to one metric to be higher ranked by the other metric.

When there is a conflict between the rankings created by NPV and IRR for a set of projects being considered for funding, it can create uncertainty about which should be chosen. To resolve this conflict decision makers must understand why each method ranks projects differently and weigh that against their own goals when making their final selection. For example, if they have limited resources or need immediate returns then they may choose to prioritize projects with higher IRRs over ones with higher NPVs. Conversely, if they are trying to maximize long-term profits then they may prioritize projects with higher NVPs even if the shorter term returns are lower than another project’s IRR ranking.

Ultimately in cases where there is a conflict between the methods used to complete project rankings, decision makers need to take into consideration both factors such as risk tolerance, timeline constraints and return objectives before ultimately selecting one option over another.