Net Present Value $($NPV$)$ Internal Rate of Return $($IRR$)$ Advantages NPV is a direct measure of value$-$added to the company from executing the project Comparing the value of alternative projects is easy with NPV analysis: just pick the project with the highest NPV over zero IRR Is a popular capital budgeting tool because it show the efficiency of capital use in an easy$-$to$-$understand percent return format. Computing IRR is valid without having to estimate a discount rate Disadvantages NPV requires an assumed input discount rate $($capital cost plus risk premium, which may be difficult to estimate. IRR computes only a percent return, not a value, and thus disregards project scale and is not a measure of ultimate worth to the company. IRR can make a small project appear more attractive than a large project. In fact, a very small project could have a very high IRR but also have a low and very unattractive NPV$.$ IRR assume cash flow returns are invested at an often unrealistically high rate $($the IRR$).$ MIRR $($modified internal rate of return$)$ analysis solves this problem. From your readings and$/$or experience: Question $1$: Add to the advantages and disadvantages to the consideration of NPV for capital projects. Question $2$: Add to the advantages and disadvantages to the consideration of IRR for capital projects.