Â The manner in which the modified IRR includes concepts from the traditional IRR as well as the NPV method. Introduction : Internal rate of return (IRR): It is a measure used to evaluate the profitability of a project in the process of capital budgeting. It is referred to as the discount rate that makes the NPV of the project equivalent to zero. Net present value method (NPV): It is a capital budgeting technique used in the assessment of the profitability of a project. It is measured as the difference between the present value of inflows of cash and that of outflows of cash.

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Chapter 12, Problem 6DQ

Summary Introduction

To explain:Â The manner in which the modified IRR includes concepts from the traditional IRR as well as the NPV method.

Introduction:

Internal rate of return (IRR):

It is a measure used to evaluate the profitability of a project in the process of capital budgeting. It is referred to as the discount rate that makes the NPV of the project equivalent to zero.

Net present value method (NPV):

It is a capital budgeting technique used in the assessment of the profitability of a project. It is measured as the difference between the present value of inflows of cash and that of outflows of cash.

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