• 4 Marks

QT – May 2019 – L1 – Q2a – Mathematics of Business Finance

Distinguish between IRR and NPV, and evaluate investment decisions using NPV and IRR.

Distinguish between Internal Rate of Return and Net Present Value. (4 marks)

Net Present Value (NPV) is the difference between the discounted cash inflows and the discounted cash outflows. The Internal Rate of Return (IRR) is the rate that will make the NPV zero.

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