Got Homework?
Connect with other students for help. It's a free community.
Here's the question you clicked on:
 0 viewing
Vinicius_Caldas
Group Title
Hi, what´s the better measure when the capital is scarce: NPV or IRR?
 3 years ago
 3 years ago
Vinicius_Caldas Group Title
Hi, what´s the better measure when the capital is scarce: NPV or IRR?
 3 years ago
 3 years ago

This Question is Closed

JamesJ Group TitleBest ResponseYou've already chosen the best response.2
NPV is in general a better measure. But here it is most emphatically better because it will tell you precisely how much cash the project will throw off. For example, suppose a company has $1,000 capital and the choice of only two nonreplicable projects: A, investment $100K, IRR = 50%, NPR = $1 million B, investment $1,000, IRR = 10%, NPV = $1.2 million Even though project A has a higher IRR, project B is preferable because it will give you more cash.
 3 years ago

Vinicius_Caldas Group TitleBest ResponseYou've already chosen the best response.0
Thanks. Moreover, if you use the MIRR you will have the same answer given by the NPV, i.e, the project B.
 3 years ago
See more questions >>>
Your question is ready. Sign up for free to start getting answers.
spraguer
(Moderator)
5
→ View Detailed Profile
is replying to Can someone tell me what button the professor is hitting...
23
 Teamwork 19 Teammate
 Problem Solving 19 Hero
 Engagement 19 Mad Hatter
 You have blocked this person.
 ✔ You're a fan Checking fan status...
Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.