When considering two mutually exclusive capital budgeting projects with conflicting rankings (one has the higher positive NPV, the other has a higher IRR), the most appropriate conclusion is to choose the project with the:
B is correct. As stated in the reading (Vol.1, p.318):
"When the IRR and NPV rules conflict in ranking projects, we should take directions from the NPV rule. Why that preference? The NPV of an investment represents the expected addition to shareholder wealth from an investment, and we take the maximization of shareholder wealth to be a basic financial objective of a company."
Note also that payback suffers from severe deficiencies as a decision tool (see Vol.4, p.15).