Internal Rate of Return
Pitfall 1 - Lending or Borrowing?
w With some cash flows (as noted below) the NPV of
the project increases s the discount rate increases.
w This is contrary to the normal relationship between
NPV and discount rates.1 , 000 3 , 600 4 , 320 1 , 728 20 %. 75
0 1 2 3 @^10 %
- − − − + −
C C C C IRR NPV