... positive, the project will be profitable. The NPVs for both corporations suggest that both projects are worthwhile, since each has a positive NPV, however, since the firm can only acquire one of the corporations, it must choose the acquisition of the corporation with a higher NPV - Corporation B. The Internal Rate of Return, IRR, is another business tool used for capital budgeting decision. IRR is the discount rate at which the present value of a series of investments is equal to the present value of the returns on those investments (NPV = 0). It is the compound return the firm will get from the project. IRR also takes into account the time value of money by considering the cash flows over the lifetime of a project. If IRR is greater than the discount rate, the firm may undertake the project in question. In this situation, acquisition of either corporation ...

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