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Vinicius_Caldas
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Hi, what´s the better measure when the capital is scarce: NPV or IRR?
 2 years ago
 2 years ago
Vinicius_Caldas Group Title
Hi, what´s the better measure when the capital is scarce: NPV or IRR?
 2 years ago
 2 years ago

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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.
 2 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.
 2 years ago
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