expressed in
today’s dollars) of an investment equals zero” (Argenti, 1994, p. 228). IRR accounts for
the time value of money and is easily understood. It can, however, be difficult to
calculate and be misleading when there is not a large initial cash outflow. Furthermore,
it usually, but not always, agrees with the outcomes from NPV. This is because the
formula for IRR is very similar to that for NPV. The IRR is the number that makes the
formula correct when it is inputted for r. Thus, IRR ¼ r in this formula