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Provide two circumstances where IRR should be avoided or replaced by NPV

Finance

Provide two circumstances where IRR should be avoided or replaced by NPV. Explain briefly

b) For projects with different lifetimes, how do we evaluate and make investment decision? Briefly explain.

c) Assume that you are valuing a project with the following expected cash flows. From Year 1 to Year 5, there will be a steady cash inflow of $50,000. At Year 6, it is expected that company will realize a cash outflow of $100,000. Cash inflows in Year 7 and 8 will be $20,000 and $10,000, respectively.

If the initial outlay (i.e., Year 0 cash flow) is $150,000 and the required rate of return is 10%, would you accept the project? Show your steps.

d) What is the payback period for the project in part (c).

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