Recognize IRR situations that require NPV, MIRR, or additional explanation.
Multiple IRR risk The project IRR is unusually high, so it must be attractive. Cash flows change sign more than once because of cleanup, overhaul, or decommissioning. Your line Because cash-flow signs change more than once, IRR may be ambiguous. Show NPV at the hurdle and MIRR before ranking it. Do not debate the high percentage before checking the cash-flow pattern. It catches the structural issue that can make IRR unreliable. Scale conflict High IRR or high NPV? For mutually exclusive choices, rank by value created unless the constraint says otherwise. MIRR use When is MIRR useful? When IRR's reinvestment…
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