"While IRR May Be Easier to Understand Than NPV, NPV

question 121

Essay

"While IRR may be easier to understand than NPV, NPV should be used as a final decision criterion for an investment." Do you agree with the above statement? Why or why not?

---

Definitions:

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, over a given period of time.

Purchasing Power

the value of currency expressed in terms of the amount of goods or services that one unit of money can buy.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

Business Managers

Professionals responsible for planning, directing, and overseeing operations and employees within companies.