The net present value and internal rate of return of the project. Net Present Value (NPV): NPV is a technique used in capital budgeting to see whether the project is profitable for the company or not. The selection is based on the result of NPV, as if it is positive, then it should be selected and in the case of negative NPV, it should be rejected. Internal Rate of Return (IRR): IRR is also a technique of capital budgeting that includes the time value of money concept. The IRR of a project exhibits the profitability that arises from the project. The IRR of a project is calculated with the help of NPV calculations.

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Chapter 5, Problem 25QP

Summary Introduction

To determine: The net present value and internal rate of return of the project.

Net Present Value (NPV):

NPV is a technique used in capital budgeting to see whether the project is profitable for the company or not. The selection is based on the result of NPV, as if it is positive, then it should be selected and in the case of negative NPV, it should be rejected.

Internal Rate of Return (IRR):

IRR is also a technique of capital budgeting that includes the time value of money concept. The IRR of a project exhibits the profitability that arises from the project. The IRR of a project is calculated with the help of NPV calculations.

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