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 Blue Hamster Manufacturing Inc.:

Last Tuesday, Blue Hamster Manufacturing 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 Delta is $11\mathrm{.}3\%,$ but he can't recall how much Blue Hamster 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 Delta. They are:

$\backslash$table$[[$Year$,$Cash Flow$],[$Year $1,$$$1,800,00$