The Effectiveness of NPV and IRR Used in Fundamental Financial Markets

DOI

10.2991/aebmr.k.220307.200How to use a DOI?

Keywords

internal rate of return; net present value; cash flow; investment

Abstract

In financial markets, investors often use internal rates of return and net present value to evaluate the value of alternative projects. In this paper, the income of two independent projects will be calculated to decide which project is more worthy. By comparing the calculation results of net present value and internal rate of return, we can visualize the investment results. Using these models, investors can see the results of their investments accurately and clearly. Besides, there is a contradiction between net present value and internal rate of return when investment projects are compared and selected. This paper makes a deep comparative analysis on the causes of contradictions and explores the causes of contradictions. The advantages and disadvantages of net present value and internal rate of return are analyzed, respectively. Investors should pay more attention to these disadvantages when investing and reduce the company’s investment risk and investors to increase the profits.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

Download article (PDF)

TY  - CONF
AU  - Yuke Zhang
PY  - 2022
DA  - 2022/03/26
TI  - The Effectiveness of NPV and IRR Used in Fundamental Financial Markets
BT  - Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)
PB  - Atlantis Press
SP  - 1208
EP  - 1212
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220307.200
DO  - 10.2991/aebmr.k.220307.200
ID  - Zhang2022
ER  -