Differentiate between NPV (Net Preset Value) and IRR (Internal rate of Return). If you are using...
- Differentiate between NPV (Net Preset Value) and IRR (Internal rate of Return). If you are using IRR to evaluate your projects, how would you rank the different projects that you are evaluating?
Homework Answers
1. Npv is the present value of the cash inflows of the project. Irr is the return that the project is expected to generate.
2. Npv is the absolute return , where as irr is the percentage return.
3. Npv assumes that the reinvestment will be done at cost of capital, where as irr assumes it will be reinvested at irr.
4. Npv of different project can be added where as irr cannot be added.
If i am using irr to evaluate the project, we will project in descending order. The project having the highest irr will be rank first and then the others as per their irr.
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Differentiate between NPV (Net Preset Value) and IRR (Internal
rate of Return). If you are using...
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and verified and be clear.
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and verified and be clear.
The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Blue Hamster Manufacturing Inc.: Last Tuesday, Blue Hamster Manufacturing Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project Lambda is...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Blue Hamster Manufacturing Inc.: Last Tuesday, Blue Hamster Manufacturing Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project Zeta is...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions. Consider the case of Cute Camel Woodcraft Company: Last Tuesday, Cute Camel Woodcraft Company lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project Lambda is...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make Capital budgeting decisions. Consider the case of Cold Goose Metal Works Inc.: Last Tuesday, Cold Goose Metal Works Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return (IRR) of Project...
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