Practice question · Match the pairs
Match each appraisal concept to its meaning.
- Discount rate
- NPV
- IRR
- Payback period
- Rate at which NPV equals zero
- Project value in today’s euros
- Time until cumulative cash recovers the outlay
- Opportunity cost of the invested money
Hints
- Separate the measures of value from the measures of speed and percentage.
- Only one of them is denominated in money.
Show the answer
- Discount rate → Opportunity cost of the invested money
- NPV → Project value in today’s euros
- IRR → Rate at which NPV equals zero
- Payback period → Time until cumulative cash recovers the outlay
Why
Four lenses on one project, with NPV as the master metric because it measures value, not speed or percentage.
Practise NPV and IRR
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