How is the NPV rule related to the goal of maximizing shareholder wealth, and under what conditions would you expect the NPV and IRR rules to return the same accept or reject decision?
Be sure to respond to at least one of your classmates' posts.
Below is the classmates post to respond to-
" The NPV (Net Present Value) rule is a theory that states that individuals who are financial managers and investors must only put money into opportunities that will provide a positive net present value. Net present value is the difference between present value of cash inflow and present value of cash outflow for a particular period of time. When it comes to maximizing shareholder wealth the NPV rule is directly related. By only investing in projects that provide a positive NPV the shareholders are taking less risk and their wealth is being maximized. If the IRR is deemed acceptable and the NPV is acceptable then the decision to go ahead with the project will reached. If the IRR is not reached and the NPV is not reached then the project will be rejected."