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$3.$ Understanding the IRR and NPV

The net present value $($NPV$)$ and internal rate of return $($IRR$)$ methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions.

Consider the case of Green Caterpillar Garden Supplies Inc.:

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Last Tuesday, Green Caterpillar Garden Supplies Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company's CFO remembers that the internal rate of return $($IRR$)$ of Project Zeta is $14\mathrm{.}6\%,$ but he can't recall how much Green Caterpillar originally invested in the project nor the project's net present value $($NPV$).$ However, he found a note that detailed the annual net cash flows expected to be generated by Project Zeta. They are:

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