In scoring models, the two alternatives with the highest scores are compared to make the final decision

Projects 1 and 2 have similar outlays, although the patterns of future cash flows are different. The cash flows as well as the NPV and IRR for the two projects are shown below. For both projects, the required rate of return is 10 percent.

Cash Flows Year 0 1 2 3 4 NPV IRR (%) Project 1 ?50 20 20 20 20 13.40 21.86 Project 2 ?50 0 0 0 100 18.30 18.92 The two projects are mutually exclusive. What is the appropriate investment decision? a. Invest in both projects. b. Invest in Project 1 because it has the higher IRR. c. Invest in Project 2 because it has the higher NPV.

One disadvantage of a forced-choice checklist is that:

A) ratings are unreliable. B) it is very difficult to design. C) raters tend not to like this format. D) the rating process can be complex.