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Subject 1. NPV and IRR The internal rate of return (IRR) is the discount rate that makes net present value equal to 0.
According to the NPV rule, a company should accept projects where the NPV is positive and reject those in which the NPV is negative. <span>A positive NPV suggests that cash inflows outweigh cash outflows on a present value basis. That is, the positive cash flows are sufficient to repay the initial investment along with the capital costs (opportunity cost) associated with the project. If the company must choose b