The net present value method differs from the internal rate of return method in that:...
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Accounting
The net present value method differs from the internal rate of return method in that:
the net present value method discounts cash flows using the risk-free rate of return and the internal rate of return method does not.
the internal rate of return method finds the rate of return that results in a zero net present value.
both methods yield similar conclusions for mutually exclusive projects.
"the net present value method discounts cash flows by the required rate of return, whereas the internal rate of return method does not take into account the time value of money."
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