anonymous
  • anonymous
Hi, what´s the better measure when the capital is scarce: NPV or IRR?
Finance
  • Stacey Warren - Expert brainly.com
Hey! We 've verified this expert answer for you, click below to unlock the details :)
SOLVED
At vero eos et accusamus et iusto odio dignissimos ducimus qui blanditiis praesentium voluptatum deleniti atque corrupti quos dolores et quas molestias excepturi sint occaecati cupiditate non provident, similique sunt in culpa qui officia deserunt mollitia animi, id est laborum et dolorum fuga. Et harum quidem rerum facilis est et expedita distinctio. Nam libero tempore, cum soluta nobis est eligendi optio cumque nihil impedit quo minus id quod maxime placeat facere possimus, omnis voluptas assumenda est, omnis dolor repellendus. Itaque earum rerum hic tenetur a sapiente delectus, ut aut reiciendis voluptatibus maiores alias consequatur aut perferendis doloribus asperiores repellat.
schrodinger
  • schrodinger
I got my questions answered at brainly.com in under 10 minutes. Go to brainly.com now for free help!
JamesJ
  • JamesJ
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 non-replicable 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.
anonymous
  • anonymous
Thanks. Moreover, if you use the MIRR you will have the same answer given by the NPV, i.e, the project B.

Looking for something else?

Not the answer you are looking for? Search for more explanations.