- This topic has 1 reply, 2 voices, and was last updated 9 months ago by
John Moffat.
John Moffat.Viewing 2 posts - 1 through 2 (of 2 total)
-
Posts
-
johnbriane
- Topics: 146
- Replies: 147
- ☆☆☆
Kaplan guide states that in times when npv and irr conflict
Npv should be considered
But I truly cannot understand what this means and how does it work
Please help me sir
John Moffat
- Topics: 57
- Replies: 49601
- ☆☆☆☆☆
There is only a possible conflict when comparing two investments.
We use NPV because the investment with the highest NPV is giving the biggest surplus.
Comparing IRR’s will not always give the same result because it is simply comparing the interest rate that gives breakeven (i.e. an NPV of zero).
It is as well just to be aware of this for Paper MA, but it is only in Paper FM that it actually becomes important.
johnbriane
John MoffatViewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.