I have two projects: X and Y. X has a higher NPV than Y, but lower ROI than Y. Which project should I pick?

Question

Anonymous · Accepted Answer

Walk through the different formulas of NPV and ROI, the advantage/disadvantage of each formula, and mention the different dependencies (i.e. maybe the NPV number has too low of a WACC, business drivers, etc.)

Anonymous on 22 Apr 2014

Arup Acharya · Answer

We should choose project with higher npv because the undisputed objectives of financi management is to magnimize shareholder wealth he higher npv will payout higher returns because it means there is a higher capital payout

Arup Acharya on 20 Oct 2014

kk · Answer

great question

Interview Question

I have two projects: X and Y. X has a higher NPV than Y, but lower ROI than Y. Which project should I pick?

Interview Answers

Add Answers or Comments