Advantages of internal rate of return method of project appraisal
The advantages and disadvantages of the internal rate of return method make it easy to compare some projects. In return, certain decisions may be easier to make. It must also be remembered that the information the IRR provides is somewhat limited and should only be used to compare projects of similar size and scope. 3. There is no need of the pre-determination of cost of capital or cut off rate. Hence, Internal Rate of Return method is better than Net Present Value method. 4. Sometimes, the pre-determination of cost of capital is very difficult. At that time, Internal Rate of Return can be used to evaluate the project.