Question
Capital Financial has an investment project that provides the following cash flows: -10,000 (year 0) +5,500 (year 1) +7,000 (year 2) +8,000 (year 3) -6,500
Capital Financial has an investment project that provides the following cash flows:
-10,000 (year 0)
+5,500 (year 1)
+7,000 (year 2)
+8,000 (year 3)
-6,500 (year 4)
The CEO of Capital Financial advocates that the firm uses NPV to evaluate this project instead of IRR. Why is this a good idea in this instance?
| You need to flip the IRR rule in this case |
| There could be multiple IRRs |
| There are mutually exclusive projects |
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Financial Crimes
Authors: Maximilian Edelbacher, Peter Kratcoski, Michael Theil
1st Edition
0367866528, 978-0367866525
