Question: Ranking Projects Using net present value (NPV) analysis, a manager can select those projects that will maximize the present value of future cash flows. NPV

Ranking Projects Using net present value (NPV) analysis, a manager can select those projects that will maximize the present value of future cash flows. NPV analysis is a powerful tool; however, surveys of current practice indicate that the internal rate of return (IRR) method enjoys considerable popularity among decision makers. What would account for IRR’s appeal? What are the drawbacks to using only the IRR method to rank projects?

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