Limitations of IRR (internal rate of return) for project evaluation

What is it about?

The IRR (internal rate of return) is a popular metric for project evaluation in the real estate industry, even though finance textbooks indicate that the NPV (net present value) approach is better. Examples of a number of cash flows are used to illustrate the limitations of the IRR method and to show that rate of return may not be the only relevant metric when evaluating potential investments.

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