A project with a high IRR might have a lower NPV

Question

Quizplus · Accepted Answer

A high internal rate of return (IRR) indicates that the project is expected to generate high returns, but it does not take into account the time value of money and does not consider the size of the initial investment. On the other hand, the net present value (NPV) takes into account both the time value of money and the initial investment, so a project with a higher IRR may still have a lower NPV if the initial investment is very high. Therefore, it is possible for a project with a high IRR to have a lower NPV.

A Project with a High IRR Might Have a Lower