In this video, I explain WHY NPV and IRR are consistent with each other, i.e. why accepting a project based on NPV will also lead one to accept the project based on IRR. I explain the intuition behind this consistency, and also emphasize that this consistency ONLY holds for projects with conventional cash flows.
Viewing and understanding this video will especially help students understand the conditions under which they cannot reliably use IRR rule to make an investment decision.
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My name is Atif Ikram. I am a Clinical Professor of Finance at Arizona State University, where I teach courses in Corporate Finance, Personal Finance, Real Estate Finance and Investments ([ Ссылка ]).
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Relationship Between NPV and IRR Decision Rules
Теги
NPV and Other Investment RulesInvestment RulesRoss Westerfield Jaffe JordanRWJJRWJJ Chapter 5Chapter 5Corporate FinanceCapital BudgetingInvestment DecisionInternal Rate of ReturnIRRIRR Decision RuleIRR Discount RateNPV = 0Zero NPVIRR NPV linkIRR NPV RelationshipIRR NPV ConsistencyConventional CashflowsConventional Cash FlowNet Present ValueNPVNPV and IRRAcceptRejectDiscount rate
