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Understanding the IRR and NPV The net present value ( NPV ) and internal rate of return ( IRR ) methods of investment analysis are
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 Cute Camel Woodcraft Company:
Last Tuesday, Cute Camel Woodcraft Company 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 but he can't recall how much Cute Camel 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:
tableYearCash FlowYear $
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