About Lesson
– Decision only on Payback period because it does not consider time value of money.
– Decision making only on B/C ratio criteria does not hold good because it does not tell wealth generating capacity and size of the business.
– Used properly, the IRR will give the same result as the NPV for independent projects and for projects with normal cash flows.
– Normal projects are projects with initial investment (negative cash flows) followed by a number of positive cash flows.
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