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    some differences between IRR and PI and NPV

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    Please expain these questions in 3-4 paragraph. Please also mention the books cited.

    1. What are some differences between IRR and PI and NPV?

    2. Why would an organization choose to lease an asset instead of buying it?

    3. Why would an organization choose to sell an asset and then lease it back?

    4. What is off-balance-sheet financing?

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    Solution Preview

    Hi there,

    Here are your answers:

    1. IRR
    Often used in capital budgeting, it's the interest rate that makes net present value of all cash flow equal zero. Essentially, this is the return that a company would earn if they expanded or invested in themselves, rather than investing that money abroad.
    source: http://www.investopedia.com/terms/i/irr.asp
    NPV
    An approach used in capital budgeting where the present value of cash inflows is subtracted by the present value of cash outflows. NPV is used to analyze the profitability of an investment or project. NPV analysis ...

    Solution Summary

    The expert provides some differences between IRR and PI and NPV.

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