Application Analysis of Main Project Evaluation Tools

Abstract

With the development of financial economy, the toolbox of project appraisal has become more and more abundant, and many decision makers do not know how to choose the most appropriate tool when they are faced with a large number of project appraisal tools when evaluating a project. In the project evaluation toolbox, Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Economic Value Added (EVA) are the four most widely used project appraisal tools nowadays, which are required by almost all decision makers in project appraisal. This paper provides an overview of the concepts, forms, limitations, and applications of NPV, IRR, MIRR, and EVA with the aim of providing the audience with a general understanding of these four program evaluation tools. Based on this, the paper further discusses a comparison of the application of these four project appraisal tools in different situations, showing the differences in their applicability in different situations. The purpose of this paper is to provide decision makers with some basis for the selection of appraisal tools.