Question

Net present value and internal rate of return are collectively known as ______ techniques​

Answer 1

Answer:

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Explanation:

You should give options or the details of the chapter and class

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Answer 2

Answer:

Explanation:

Definition of Net present value and internal rate of return:

Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. By contrast, the internal rate of return (IRR) is a calculation used to estimate the profitability of potential investments.

Both of these metrics are largely employed in capital budgeting, a procedure used by businesses to assess the value of potential investments or expansions. When presented with an investment opportunity, a corporation must determine if making the investment will result in net economic gains or losses for the business.

Information about Net present value:

To do this, the company forecasts the project's future cash flows and converts them into present value sums using a discount rate that reflects both the project's risk and cost of capital. The investment's future positive cash flows are then combined into a single present value. The investment's net present value can be calculated by deducting this amount from the investment's original cash need

Information about internal rate of return:

As a result, JKL Media's project has a positive NPV, but from a business standpoint, the company should also be aware of the rate of return on this investment. To accomplish this, the company would only perform a new calculation of the NPV equation, setting the NPV component to zero this time, and solve for the newly discovered discount rate. The project's internal rate of return is the rate that the solution generates (IRR).

Comparing Net present value and internal rate of return:

While the IRR approach produces the projected percentage return, the NPV method produces the predicted monetary value that a project will deliver. Purpose. The breakeven cash flow level of a project is the focus of the IRR technique, whereas project surpluses are the subject of the NPV method.

• Net present value and internal rate of return are collectively known as disparity techniques.

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