It's interesting to hear from others on their "favorites" when it comes to investment ranking. In my experience, not many actually prefer the NPV unless they are in the "numbers" field (accounting, finance, etc). Most managers I have dealt with like the payback method or the IRR because it makes more sense to them. The payback period tells them how fast they get their money back in terms of years and it's very simple to calculate. The IRR is simply in terms that are easy for managers to understand. 10% return is simple and makes sense when we're already accustomed to looking at profits in terms of percentages. Of course these methods don't necessarily give us all the information that the NPV does. However, many people find it difficult to calculate and understand NPV, so it's not as often used. At least not in my experience.

 

Group, what other insights or advice would you offer your peers or coworkers about choosing an investment ranking method? Did you find any articles, websites, or videos in your research that are particularly helpful in understanding this week's discussion topic that you'd like to share?