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Net Present Value vs. IRR

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Explain the Net Present Value (NPR) concept. What values must the NPR take on for the project to be acceptable at the promise of a return greater than the required rate of return? Contrast this method to Internal Rate of Return.

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Solution Summary

This solution compares and contrasts the concepts of Net Present Value (NPV) and Internal Rate of Return (IRR).

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NPV = Present value of future cash flows - Initial cash outflow. NPV represents the Net Present Value of the project and it is needed to calculate the monetary effect of the project. If NPV is positive, then the project's expected return is ...

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