Christian Kalhoefer () (Faculty of Management Technology, The German University in Cairo)
Abstract
The discussion about the best method to be used in capital budgeting has been long and intensive. Differences between Net Present Value and Internal Rate of Return seem to cause everlasting problems, while especially the Internal Rate of Return often is neglected as an appropriate measure. A famous example of the problems caused by the different approaches is the ranking of mutually exclusive projects. The following paper is presenting an easy explanation, without introducing new and more complicated measures, but by simply explaining the nature of and differences between Net Present Value and Internal Rate of Return.
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Publisher Info
Paper provided by The German University in Cairo, Faculty of Management Technology in its series Working Papers with number
3.