NPV and IRR Rules


This spreadsheet explains the NPV and IRR Rules for project selection. The NPV Rule is to take a project if its Net Present Value is positive. The IRR Rule is to take a project if its Internal Rate of Return is greater than the cost of capital. The IRR Rule should only be used for "standard" projects. The spreadsheet explains some pitfalls to avoid in using the IRR Rule.
Subjects: Finance, Spreadsheets
Source: Professor Kerry Back (Washington University in St. Louis) (visit original source)  
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