Explain why this conflicting situation might occur and what conclusions the analyst should accept, indicating the shortcomings and the advantages of each method.  Assuming the data is correct, which method will most likely provide the most accurate decisions and why?

Finance 5 discussion | Business & Finance homework help

This conflicting situation can occur because the NPV and IRR methods measure profitability in different ways. The NPV method looks at all cash flows associated with a project by discounting them to their present value, whereas the IRR relies on the internal rate of return (the rate at which future cash flows will yield zero net present value). As such, these two methods can generate different results even when given the same set of assumptions. For example, if a project has unequal periodic cash flows or multiple discount rates then it’s possible for both measures to produce conflicting conclusions.