my question is why is NPV method preffered over IRR method?..
Module says projects with heavy cash flows will be favoured by the IRR method..(HOW COME?)
please explain me with example....thanks in advance.
ARSHAD (student-CA_final) (74 Points)
19 September 2011my question is why is NPV method preffered over IRR method?..
Module says projects with heavy cash flows will be favoured by the IRR method..(HOW COME?)
please explain me with example....thanks in advance.
* Krishna *
(CA Student)
(6149 Points)
Replied 19 September 2011
NPV is better than IRR because:
a. NPV shows expected increase in shareholders wealth
b. NPV gives clear-cut accept/reject decision, while IRR gives multiple results.
c. NPV gives better ranking when compared to IRR.
d. NPV calculation is easier, while IRR takes long time to calculate.
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