Net Present Value - Internal Rate of Return

System

The NPV is a positive value. It shows that the firm has a 9% cost of capital and that after discounting future cash flows at 9% per year the cost of the project is less than the present value of future cash flows by £4,450.<BR>The normal rule of thumb woiuld be recommend this investment.<BR>The IRR is the rate at which future cash flows are discounted back to exactly the the value of the investment. As the NPV suggests, this exceeds the cost of capital.<BR>The normal rule of thumb woiuld be recommend this investment.<BR><BR>You could look at other data such as the initial cost of the investment and the number of years required to achieve these results, but I wouldn't expect too much complication on the ECR paper.<BR><BR>So the interpretation would be that the investment looks worth proceeding with, providing there are no negative qualitatative factors that have not been identified.