Which is better for appraising projects, NPV or IRR?

Asked by John McDaid on April 10th, 2012 @ 12:48 a.m.
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The NPV rule is generally better, and easier to use than the IRR as use of the IRR rule can lead to errors. For example, for standalone projects, the IRR rule only works if the negative cashflows occur before all the positive cashflows. Other times there can be multiple IRRs for one project making it impossible to use the IRR rule. Lastly, there can be times when the NPV is always positive for any discount rate, meaning that the IRR does not exist. Therefore, although at times useful, the IRR is not always accurate and it is better to use the NPV rule to evaluate a project.
Answered by Chido Munangagwa on April 12th, 2012 @ 10:19 p.m.