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Question 20

What is the difference between NPV and IRR?

A.

✑ NPV is a measure of how much money a project can be expected to return in future value.

✑ IRR is a measure of how quickly the money invested in the project will decrease in value.

B.

✑ NPV is a measure of how much money a project can be expected to return in today's present value.

✑ IRR is a measure of how quickly the money invested in the project will increase in value.

C.

✑ IRR is a measure of how much money a project can be expected to return in future value.

✑ NPV is a measure of how quickly the money invested in the project will decrease in value.

D.

✑ IRR is a measure of how much money a project can be expected to return in today's present value.

✑ NPV is a measure of how quickly the money invested in the project will increase in value.

    Correct Answer:

    The correct answer is B. NPV (Net Present Value) is a measure of how much money a project can be expected to return in today's present value. It takes into account the time value of money, discounting future cash flows to determine their worth in today's terms. IRR (Internal Rate of Return) is a measure of the rate at which the invested money in a project will grow. It is the discount rate that makes the net present value of all cash flows from a particular project equal to zero, effectively showing the efficiency or profitability of an investment.

Discussion
MichaelT2020

B is the correct answer.

Rume

i woul go for B

TORA

B is the correct answer (see "Agile Estimating and Planning" chapter 10 page 104). In the paragraph of the IRR almost the same words are used.

juzer

Why is B not the correct answer instead of D and why is this question of relevance in an ASM certification ??

Nosrat

By Answer D the definition of IRR and NPV is absolutely verwies, therefore I cannot believe that answer D is correct.

aiza969

B is the correct answer indeed.