Can you have negative NPV and positive IRR?
You can have a positive IRR and a negative NPV.
Look, basically when NPV is equal to zero, IRR is equal to the discount rate.
The discount rate is always above zero hence when the IRR is below the discount rate, the IRR is still positive but the NPV is negative..
Which is better NPV or IRR and why?
Because the NPV method uses a reinvestment rate close to its current cost of capital, the reinvestment assumptions of the NPV method are more realistic than those associated with the IRR method. … In conclusion, NPV is a better method for evaluating mutually exclusive projects than the IRR method.
How is IRR different from NPV?
Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. By contrast, the internal rate of return (IRR) is a calculation used to estimate the profitability of potential investments.
Is IRR always higher than NPV?
NPV: the preferred technique Whenever an NPV and IRR conflict arises, always accept the project with higher NPV. It is because IRR inherently assumes that any cash flows can be reinvested at the internal rate of return.