NPV vs. IRR
Discount rate 0%, NPV =$670,000
Discount rate 2%, NPV=$614,400
Discount rate 6%, NPV=$514,820
Discount rate 11% NPV= $409,000
Capital Cost 5%, Modified IRR= 45.6%
Upon plotting these points on a chart an obvious relationship is modeled. The lower the discount rate the higher the NPV appears to manifest. The curve crosses the x axis at a discount rate of .03%.
Rate at 1%, NPV=$65,358
Rate at 4%, NPV= $7,593
Rate at 10%, NPV= -$91,776
Rate at 18%, NPV= -$197,871
Discount rate at X axis = 2.8%
NPV=3,864,000
Anthes (2003) presented some very useful descriptions of the terms net present value (NPV) and internal rate of return (IRR). The article suggested that the NPV and the internal rate of return IRR is defined as two faces of the same coin and both reflect on the anticipated performance of a firm or business over a particular period of time....
[ View Full Essay]