Discounted cash flow analysis techniques are used by managers to understand the impact of investment decisions in

Question:

Discounted cash flow analysis techniques are used by managers to understand the impact of investment decisions in terms of “today’s dollars.” Two common techniques that use are (NPV) and (IRR). Like most analysis techniques, each of these methods requires us to make certain assumptions.

Required
Describe the assumptions underlying NPV and IRR.

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Discounted Cash Flows
What is Discounted Cash Flows? Discounted Cash Flows is a valuation technique used by investors and financial experts for the purpose of interpreting the performance of an underlying assets or investment. It uses a discount rate that is most... Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...