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Investments

Beyond Budgets and Deadlines: A CFO’s Perspective on True Project Success

Beyond Budgets and Deadlines: A CFO’s Perspective on True Project Success

Beyond Budget and Deadlines: A CFO’s Guide to True Project Success
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30.10.2025Tags: Business Management, Corporate Culture, Critical Thinking, Investment Analysis, Management, Project Management, Strategic Planning, Strategic Thinking
IRR vs. NPV: Why a Popular Investment Evaluation Method Can Mislead You

IRR vs. NPV: Why a Popular Investment Evaluation Method Can Mislead You

NPV vs. IRR: Is your favorite investment metric lying to you? A CFO explains why Internal Rate of Return (IRR) is flawed and why Net Present Value (NPV) remains the only reliable criterion.
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17.10.2025Tags: Capital Budgeting, Corporate Finance, Discounted Cash Flow, Financial analysis, Internal Rate of Return, Investment Appraisal, MIRR, Net Present Value, NPV vs IRR, Reinvestment Rate
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Contents

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  • How to avoid mistakes when choosing an investment project?
  • What Is IRR and Why Is It Attractive?
  • Four “Pitfalls” of the IRR Method Every Manager Should Know
    • Pitfall #1: Lending or Borrowing?
    • Pitfall #2: Multiple IRR Values
    • Pitfall #3: Mutually Exclusive Projects (The Scale and Timing Problem)
      • The Scale Problem
      • The Timing Problem
    • Pitfall #4: The Unrealistic Reinvestment Rate Assumption
  • Modified IRR (MIRR): An Attempted Fix That Highlights the Flaws
  • Conclusion: Why Is NPV the “Gold Standard”?
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