NET PRESENT VALUE (NPV) VERSUS INTERNAL RATE OF RETURN (IRR) IN TAKING THE INVESTMENT DECISION FOR MUTUALLY EXCLUSIVE PROJECTS

Camelia Militaru
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Camelia Militaru: Romanian-American University, Bucharest

Journal of Financial and Monetary Economics, 2020, vol. 8, issue 1, 125-128

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.

Keywords: Investment decision; Net Present Value; Internal Rate of Return (search for similar items in EconPapers)
JEL-codes: G30 G31 (search for similar items in EconPapers)
Date: 2020
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