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[DOC File]Chapter 10
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The NPV method assumes the intermediate cash flows are reinvested at the discount rate, whereas the IRR method assumes intermediate cash flows are reinvested at the IRR. On a purely theoretical basis, the NPV's reinvestment rate assumption is superior because it provides a more realistic rate, the firm's cost of capital, for reinvestment.
npv compared to irr

[DOC File]Texas Tech University
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Using the NPV method, project B should be selected. IRR. IRRA = 16% (rounded)* IRRB = 14% (rounded) Using the IRR method, project A should be selected. This suggests a ranking conflict between the NPV and IRR methods. To maximise the value of the company, the NPV method should be used and therefore project B should be selected.
difference between npv and irr

[DOC File]chapter
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b. The NPV method assumes that cash flows will be reinvested at the risk-free rate, while the IRR method assumes reinvestment at the IRR. c. The NPV method assumes that cash flows will be reinvested at the cost of capital, while the IRR method assumes reinvestment at the risk-free rate. d. The NPV method does not consider the inflation premium. 26.
is npv or irr better

[DOC File]CHAPTER 21
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b. The NPV method assumes that cash flows will be reinvested at the risk-free rate, while the IRR method assumes reinvestment at the IRR. c. The NPV method assumes that cash flows will be reinvested at the cost of capital, while the IRR method assumes reinvestment at the risk-free rate. d. The NPV method does not consider the inflation premium. 16.
why use npv and irr

[DOC File]Exam-type questions
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A Net present value. B Internal rate of return. C Payback period. D Accounting rate of return. 2. Virunga Co uses the net present value (NPV) method, the internal rate of return (IRR) method and discounted payback period (DPP) to appraise its new investment opportunities. An investment opportunity was recently appraised using each of these ...
npv compared to irr

[DOC File]Chapter 7
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1. The NPV method's assumption that cash inflows are reinvested at the cost of capital is generally more reasonable than the IRR's assumption that cash flows are reinvested at the IRR. This is an important reason why the NPV method is generally preferred over the IRR method. a. True. b. False (11-6) Modified IRR F I Answer: a EASY. 2.
difference between npv and irr

The difference between NPV and IRR — AccountingTools
Calculate net present value (NPV) and internal rate of return (IRR) for a given project and evaluate each method. Define NPV profiles, the crossover rate, and explain the rationale behind the NPV and IRR methods, their reinvestment rate assumptions, and which method is better when evaluating independent versus mutually exclusive projects.
is npv or irr better

[DOC File]CHAPTER 7: Financial Budgeting - CPA Diary
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3. Use and evaluate the two main discounted cash flow (DCF) methods: the net present value (NPV) method and the internal rate-of-return (IRR) method. What approaches might be used to recognize risk in capital budgeting? The required rate of return (RRR) …
why use npv and irr

[DOC File]Tutorial exercise 7
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a. the NPV of the investment is higher. b. the IRR of the investment is lower. c. there is no difference in either NPV or IRR. d. total cash flows over the useful life would be lower. a 14. The NPV and IRR methods give. a. the same decision (accept or reject) for any single investment. b. the same choice from among mutually exclusive investments.
npv compared to irr

Npv and irr method