How to Use Net Present Value (NPV)

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This 11 page paper answers student questions about the use of Net Present Value (NPV), Payback and Internal Rate of Return (IRR) to discuss the purchase of equipment that will create operating cost savings. The writer also considers the advantages and disadvantages of using the NPV, IRR and Modified Internal Rate of Return (MIRR) to determine the potential return of the project. The writer ends the paper by considering when NPV is a useful tool for evaluating purchases; examples include the purchase of an aircraft and obtaining a patent on a new drug. There are 7 sources listed in the bibliography.