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Anomalies in net present value calculations. A solution

  • Economics


The so-called anomalies that arise in the computation and interpretation of the Net Present Value (NPV) and the Internal Rate of Return (IRR) can be easily overcome if the properties of the NPV function are taken into account and it is clearly defined what is an investment and what is a credit. All the roots of the NPV function have economic meaning and, when there is at least one IRR, the NPV and the IRR criteria agree.

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