Ranking conflicts: NPV vs. IRR
The NPV and IRR methods may rank projects differently.
If projects are independent, accept if NPV > 0 produces the same result as when IRR > r.
If projects are mutually exclusive, accept if NPV > 0 may produce a different result than when IRR > r.
The source of the problem is different reinvestment rate assumptions
Net present value: Reinvest cash flows at the required rate of return
Internal rate of return: Reinvest cash flows at the internal rate of return
The problem is evident when there are different patterns of cash flows or different scales of cash flows.