Question: b. Net present value (NPV) Net present value (NPV): it is the excess of present value of cash inows from the project over the present

b. Net present value (NPV) Net present value (NPV): it is the excess of present value of cash inows from the project over the present value of cash outflows. For ex: Present value of cash inows was $100,500 and present value of cash outflows were $100,000. Then project will be accepted. Since, NPV is positive. If the Present value of cash inows was $100,000 and present value of cash outflows were $100,500. Then project will be rejected. Since, NPV is negative. c. Internal rate of return (IRR) Internal rate of return (IRR): internal rate of return is the rate at which net present value will be ZERO. It is the firm's minimum benchmark acceptable discounting rate for the rm. Projects with below benchmark will be rejected and vice-versa. For ex: if the project has 12% IRR and if the rm requires minimum 15%, project will be rejected

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