The net present value method and the internal rate of return method will always yield the same decision when

Question

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The net present value (NPV) method and the internal rate of return (IRR) method will always yield the same decision when evaluating a single project because both methods are based on the same set of cash flows and the same discounting process. The difference in the methods comes into play when comparing mutually exclusive projects or selecting from multiple opportunities, as the NPV method considers the scale of the investment and the actual dollar value of returns, while the IRR method focuses on the rate of return, which can lead to different decisions in those scenarios.

The Net Present Value Method and the Internal Rate of Return