There are circumstances where the NPV rule and IRR rule

There are circumstances where the NPV rule and IRR rule provide conflicting advice,  NPV rule is more preferred over IRR.

 

The reason is that NPV more likely uses the “realistic” rate, to discount the cash flows, rather than an “arbitrary” rate, the IRR, that makes NPV =0.  When the IRR is very high relative to the actual cost of capital,  it is unrealistic to assume reinvestment of the cash flows at that high rate.