re: Random Money/Business/Finance Thoughts Thread

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Got it now. The higher the benchmark rate you put into your formula, the more your NPV increased, showing that NPV is the more exact fundamental formula, although people usually prefer the ease of using IRR in practice.

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Actually, my point is that IRR is still in fact the most useful result. Instead having to assume a discount rate to test at various points for positive NPV, you now know that NPV is positive if discount rate or cost or capital is at least 6%. People like to throw IRR under the bus, but even in the example above it is superior to NPV if interpreted rigorously.