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Summarize two advantages of the internal rate of return (IRR) method used in evaluation of the viability of an investment project.

      

Summarize two advantages of the internal rate of return (IRR) method used in evaluation of the viability of an investment project.

  

Answers


Francis
Advantages of internal rate of return (IRR) method of evaluating the viability of a project.
(i) Considers the time value of money
(ii) it’s a percentage and therefore easily understood.
(iii) Uses cash flows not profits
(iv) Considers the whole life of the project
(v) Means a firm selecting projects where the IRR exceeds the cost of capital should increase shareholders’ wealth.
francis1897 answered the question on November 8, 2022 at 07:59


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