In spite of the theoretical superiority of NPV, financial managers prefer to use IRR.

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Financial managers prefer to use IRR because it is a simple and easy metric to understand, and can be used to evaluate projects with different cash flows and investment sizes. Additionally, IRR provides a clear indication of the percentage return on the investment, making it easier to compare with other investment opportunities. However, despite these advantages, NPV is considered the superior metric as it provides a clearer indication of the actual value added by the investment after taking into account the time value of money and the cost of capital.

In Spite of the Theoretical Superiority of NPV, Financial Managers