Describe the net present value (NPV), internal rate of return (IRR), profitability index, and payback methodologies for calculating the projects viability.

Proposal of 450 to 1,350 words describing the application of methods for calculating

To assess project viability, the net present value (NPV), Internal Rate of Return (IRR), Profitability Index and Payback Methodologies are used. By subtracting the total cost of a given project from its anticipated returns, NPV considers discounted cash flows and determines if it’s worth investing. IRR measures the profitability of a project by comparing initial costs with benefits over time. This ratio is calculated using an interest rate or discount.

The Profitability Index measures the amount of profit generated relative to a project’s cost, while the Payback Method looks at how long it will take to recover one’s investments in relation to cash inflows over time. All of these metrics can provide insights on how successful an investment could be.