*Comparing the net present value (NPV) method and the internal rate-of-return (IRR) method for a company considering a $130 million capital investment to expand production by building a new manufacturing plant and distribution center.

After studying about the different capital investment profitability models, I was leaning towards the net present value method. But then as I began to dissect my understanding of the concepts, knowing that net present value takes into consideration that a dollar value now is worth more than a dollar value tomorrow, I had to reevaluate my position.

While net present value is an excellent tool, I think that when evaluating an investment in a new manufacturing plant and distribution center, the increased cash flow should somehow be incorporated into the analysis.

Looking for an expert opinion?