The net present value model differs from the IRR model in that it does NOT show the project's unique rate of return.

Question

Quizplus · Accepted Answer

The net present value (NPV) model calculates the present value of future cash flows and subtracts the initial investment to determine whether the project is financially feasible. It does not show the project's unique rate of return. In contrast, the internal rate of return (IRR) model determines the project's unique rate of return by calculating the discount rate that makes the NPV equal to zero.

The Net Present Value Model Differs from the IRR Model