Conflict Between NPV and IRR..

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ABS 10
Nov 10, 2023
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Nisar Khan Corporate Finance-7A3 17 th October 2023 Whenever there is a conflict between NPV and IRR, which one will you use to make a decision? Why? Explain briefly. Include definitions of NPV and IRR, plus distinctions. In decision-making, when there's a conflict between NPV (Net Present Value) and IRR (Internal Rate of Return), I would prioritize NPV. NPV quantifies the total value of an investment by discounting cash flows to their present value, considering a specific discount rate. IRR, on the other hand, is the rate at which the project's net cash flows equal zero. NPV is favored as it provides a more comprehensive assessment of profitability and is less susceptible to misleading outcomes in cases of non-conventional cash flow patterns.
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