Hi everyone, I appreciate your input. Do you use NPV tool to make decision to invest or no for small company and what's the connection with hurdle rate? I'm trying to understand make decision whether to invest in $$$$$ or no. thanks, MAZIN
NPV vs hurdle rate
Answers
Hurdle Rate (MARR) The hurdle rate is the minimum rate that the company or manager expects to earn when investing in a project. The IRR, on the other hand, is the interest rate at which the net present value (NPV) of all cash flows, both positive and negative, from a project is equal to zero.
You might also check out Modified Internal Rate of Return, which I prefer when compared to traditional IRR. I feel MIRR is more accurate. You'll want to look at both NPV and MIRR to get a sense of which investment you should undertake.
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