Evaluation Method Based on NPV and IRR

Abstract

In the modern market, many companies need to choose the most profitable project among different projects. Even in different industries such as catering, service, employment and so on also need to make the right choice. So developing an effective business strategy, analyzing and forecasting financial performance, and developing an effective working capital structure are very important. In this paper, I first meet the definition of the decision-making tools NPV and IRR. Then I compare the NPV and IRR which can help the managers to make a good choice in complex market conditions. At last, I use some examples to evaluate these two methods which can be benefit to decision-making. I hope this paper can provide some implications to corporate managers, investors, and regulators.