The internal rate of return method and the payback period method will always give the same decision as to whether to accept a project, if the same inputs are used.

Question

Quizplus · Accepted Answer

The internal rate of return method and the payback period method may give different decisions depending on the timing and amount of cash flows. The IRR method focuses on the merit of the project as a long-term investment, while the payback period method is more concerned with the speed of generating cash inflows to recover the initial investment.

The Internal Rate of Return Method and the Payback Period