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Net Present Value (Npv) Versus Internal Rate Of Return (Irr) In Taking The Investment Decision For Mutually Exclusive Projects

Author

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  • MILITARU, Camelia

    (Romanian-American University, Bucharest)

Abstract

In current economic context, characterized by multiple challenges and uncertainties, it is extremely important taking investment decision to be rigorously founded. Due to fact that at base of its adoption are methods for evaluation of the investment projects, especially those indicators that use discounting technique for ranking investment process, Net Present Value (NPV) and Internal Rate of Return (IRR) require detailed analysis, especially for mutually exclusive projects, because there are situations where the two methods lead to different decisions, such as: NPV indicates the adopting of one project, whereas IRR choose another project.

Suggested Citation

  • MILITARU, Camelia, 2020. "Net Present Value (Npv) Versus Internal Rate Of Return (Irr) In Taking The Investment Decision For Mutually Exclusive Projects," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 8(1), pages 125-128, October.
    • Handle: RePEc:vls:rojfme:v:8:y:2020:i:1:p:125-128
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    More about this item

    Keywords

    Investment decision; Net Present Value; Internal Rate of Return;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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