# Internal Rate of Return (IRR) Method

Internal Rate of Return (IRR) Method is the reduction rates frequently used in capital budgeting that creates the net present value of the entire cash flows from an exacting project equivalent to zero. Usually speaking, the superior a project’s internal rate of return (IRR) Method, and the additional attractive it is to take on the project.

## Net Present Value (NPV) Method Versus Internal Rate of Return (IRR) Method

Net Present Value (NPV) Method Versus Internal Rate of Return (IRR) Method Learning Objectives: What is the difference between net present value (NPV) method and internal rate of return (IRR) method? The net present value (NPV) method has several important advantages over the internal

## Review Problem 2: Comparison of Capital Budgeting Methods

Review Problem 2: Comparison of Capital Budgeting Methods Lamer company is studying a project that would have an eight-year life and require a \$2,400,000 investment in equipment. At the end of eight years, the project would terminate and equipment would have no salvage value.

## Capital Budgeting Decisions

Learning Objectives: Evaluate the acceptability of an investment project using the net present value method. Evaluate the acceptability of an investment project using the internal rate of return method. Evaluate an investment project that has uncertain cash flows. Rank investment projects in order of