Maurice Tutor

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About Maurice Tutor

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

Expertise:
Algebra,Applied Sciences See all
Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 402 Weeks Ago, 2 Days Ago
Questions Answered: 66690
Tutorials Posted: 66688

Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

Experience

  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 03 Aug 2017 My Price 4.00

NPR and IRR

1. Comparing NPR and IRR – Monica and Rachel are having a discussion about IRR and NPV as a decision model for Monica’s new restaurant. Monica wants to use IRR because it gives a very simple and intuitive answer. Rachel states that there can be errors made with IRR that are not made with NPV. Is Rachel right? Show one type of error can be made with IRR and not with NPV?

 

Solution: The most typical example here is with two mutually exclusive projects where the IRR of one project is higher than the IRR of the other project but the NPV of the second project is higher than the NPV of the first project. When comparing two projects using only IRR this method fails to account for the level of risk of the project cash flows. When the discount rate is below the cross-over rate one project is better under NPV while the other project is better if the discount rate is above the cross-over rate and still below the IRR.

Answers

Maurice Tutor
(5)
Status NEW Posted 03 Aug 2017 08:08 PM My Price 4.00

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