This question basically asks you to compare the Net Present Value (NPV) to the Internal Rate of return (IRR) on the time length of an investment project.. a. Draw a "growth curve" for a investment project on a log PV -t space and interpret it's meaning. b. On your graph show the optimal investment time under the NPV criterion c. Show the same for the IRR criterion d. In general when do you prefer IRR over NPV ?

Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter14: Investment, The Capital Market, And The Wealth Of Nations
Section: Chapter Questions
Problem 3CQ
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This question basically asks you to compare the Net Present Value (NPV) to the Internal Rate of return
(IRR) on the time length of an investment project..
a. Draw a "growth curve" for a investment project on a log PV -t space and interpret it's meaning.
b. On your graph show the optimal investment time under the NPV criterion
c. Show the same for the IRR criterion
d. In general when do you prefer IRR over NPV ?
Transcribed Image Text:This question basically asks you to compare the Net Present Value (NPV) to the Internal Rate of return (IRR) on the time length of an investment project.. a. Draw a "growth curve" for a investment project on a log PV -t space and interpret it's meaning. b. On your graph show the optimal investment time under the NPV criterion c. Show the same for the IRR criterion d. In general when do you prefer IRR over NPV ?
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