What is IRR.docx - 1 What is IRR Internal Rate of Return(IRR is the rate at which the net present value of all cash flows(positive and negative from a

What is IRR.docx - 1 What is IRR Internal Rate of...

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1.What is IRR? Internal Rate of Return (IRR) is the rate at which the net present value of all cash flows (positiveand negative) from a project or investment is zero. Internal rate of return is used to evaluate theattractiveness of a project or investment.2.Describe the principles of cost and benefit analysis?Costs - Benefits (CBA) can be described as the flow of cash outside and inside the project, whichis useful for determining if they are worthwhile. -There must be a common unit of measure.-The CBA value should represent the consumer or manufacturer, based on their actualbehavior.-Benefits are often measured by market choices.-Gross benefits of an increase in comsumption is an area under the demand curve.-Some benefit measurements require the valuation of human life.-Double counting of benefits or cost must be avoided.

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