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Reply: NPV IRR and Payback period

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Topic History of : NPV IRR and Payback period

Max. showing the last 6 posts - (Last post first)
13 years 1 month ago #1870

Cornelius Fichtner

Cornelius Fichtner's Avatar

Muhamad,

Larger NPV = Good
Larger IRR = Good
Larger Payback Period = Bad

So in your example, where project A has a larger NPV and also a larger Payback Period it is impossible to really make a selection:

NPV = Project A has a larger NPV and is therefore better
Payback Period = Project B has a smaller Payback Period and is therefore better

It's impossible to make a final decision just based on these numbers.
13 years 1 month ago #1869

Muhammad Zahid

Muhammad Zahid's Avatar

i read that during project selection v have to consider larger NPV and IRR while small or little Payback period.so what v have to select in following scenarios.
Project A has NPV and Payback period both are larger then Project B.
so ?

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