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What causes conflicts in the ranking of projects via net present value and internal rate of...

What causes conflicts in the ranking of projects via net present value and internal rate of return?  Please explain in detail.

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In case of independent projects, there is no need to worry about which project to accept, but in the case of mutually exclusive projects , we need to choose between one project. Conflict occurs when both these methods provide conflicting results.

The reinvestment rate assumption of the NPV and the IRR is different. The NPV assumes that the cash flows are reinvested at the cost of capital while the IRR assumes that the cash flows are reinvested at the IRR. So, the project with a higher NPV should be chosen as the NPV method provides accurate results. The IRR is unrealistic in comparison to the NPV.

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