The net present value and internal rate of return methods will always agree on whether a project enhances or harms shareholder wealth.

Question

Quizplus · Accepted Answer

Both methods are used to determine the financial viability of a project and take into account the time value of money. If a project has a positive net present value or internal rate of return greater than the required rate of return, it will enhance shareholder wealth. If both methods result in a positive outcome, they will agree on the decision to pursue the project. However, if one method indicates a negative outcome while the other indicates a positive outcome, further analysis may be necessary to determine the most appropriate decision for shareholders.

The Net Present Value and Internal Rate of Return Methods