Advantages and disadvantages of the irr and npv methods

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What are the advantages and disadvantages of the IRR and NPV methods? What are the assumptions of the reinvestment rate, and which method is superior and under what conditions?

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The paper effectively provides discussing of the IRR and NPV methods and reflects their critical comparison. There are different ways to evaluate the growth of an organization using the various methods. There are few of the advantages and disadvantages of these methods that have bee reflected throughout the paper. Few of the advantages of the IRR methods areTime value of money, Simplicity, Hurdle rate and the required rate of return is mainly a rough estimate. Few of its disadvantages are as follows: Ignores the size of the project, Ignores future costs and Ignores the reinvestment rates. The advantages of NPV method evaluates if a specified investment will bring more value to the organization or for the investor.

Reference no: EM131917069

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