Abstract
This paper discusses the comparison between two popular investment rules: Net Present Value (NPV) and Internal Rate of Return (IRR). This study aims to determine which investment rule is more appropriate in financial market. This study is more suitable for people who don’t know much about NPV and IRR but need to use them to evaluate something. This study analyses the advantages and limitations of both NPV and IRR, using factors such as cash flow, discount rate and project scale. In addition, this study also lists examples and practical applications of these investment rules to illustrate which investment rules are more suitable for which situations. By studying the advantages and disadvantages of NPV and IRR, this study aims to help people choose the most appropriate investment rule to make informed investment decisions in financial markets. This study has important practical significance for participants in financial markets to make project decisions.
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