Managerial Corporate Finance

3750 In evaluating investment, its investment options using the Net Present Value (NPV) and Internal Rate of Return (IRR). There is a need to rank the investments in terms of NPV and IRR from highest to lowest. The one with the highest is the most profitable among the four. Table I below shows the summary of spreadsheet calculations over the different investment options. If we rank them according to the Net Present value, they would come as follows from highest to lowest: Investment No. 3, 2, 1 then 4. If we rank them according to IRR, from highest to lowest they will come under the following order: number 2, number 1 and the numbers 3 and 4 will come as third because of the tie. So there is therefore a conflict between NPV and IRR so to settle the issue let consult an authority in financials management.