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NPV vs. IRR: What's the Difference?

By Motley Fool Staff – Updated Dec 5, 2024 at 11:00AM

Key Points

  • NPV calculates the current value of future cash flows, highlighting a project's profitability potential.
  • IRR measures the annual return rate, guiding investors on the profitability and breakeven point.
  • NPV is preferred for long-term investments, while IRR is better for evaluating share distributions in projects.
Key findings are powered by ChatGPT and based solely off the content from this article. Findings are reviewed by our editorial team. The author and editors take ultimate responsibility for the content.

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