Question

What are the advantages of using a methodology like NPV over a methodology like IRR?

Answer 1

Advantages of NPV over IRR:

1. NPV is easy to find manually due to its ease of formula but IRR need to be find using trial and error while doing manually.

2. NPV gives only one value over the life of project but IRR can give more than one value if there is more than once cash outflows.

3. NPV is best measure to analyse the project, if the NOV is positive then one should accept the project and vice versa. But in case of IRR it is difficult to judge on this value.