Question: Critically assess the difference between net present value (NPV) and internal rate of return (IRR) in capital budget decisions - specifically: a) How to interpret

Critically assess the difference between net present value (NPV) and internal rate of return (IRR) in capital budget decisions - specifically:

a) How to interpret each.

b) Advantages and disadvantages of each.

c) Which of the two (if either) is preferable; under what circumstances and why.

Support your answer with a numerical example, comparing two projects for which a capital budgeting decision is required on the basis of NPV and IRR. [20 Marks]

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