Explain when to use or not use a given methodology

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To calculate a project's NPV, its cash flows have to be discounted back to time zero at the appropriate discount rate. When all the cash flows are back to time zero, these discounted cash flows are added together. A project should only be accepted if its NPV is greater than zero. IRR is the discount rate that causes a project's NPV to equal zero. A financial analyst has been asked to evaluate a project. The financial analyst uses IRR, which analyzes returns, instead of NPV, which analyzes dollar amounts. Will both of these rules always yield the same accept or reject decisions? Explain when to use or not use a given methodology. Justify your answers using examples and reasoning. Comment on the postings of at least two peers and indicate whether you agree or disagree with their views.

Reference no: EM13912463

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