Investment Decision and Portfolio Management : A study of HDFC Bank and SBI Bank

The mechanics and the concept behind the rules of NPV and MRR are similar. Under the NPV rule, we discount the cash flows at a given rate, which is normally the cost of capital, and arrive at NPV. Under the IRR method, we find a discount rate that makes NPV zero and compare this rate with the cost of capital. The data requirements under both the methods are identical. However, for calculating the IRR one does not need the cost of capital but for NPV we need it. For making the decision under both the methods, cost of capital would be required Key words:- Normally, Mechanics, Requirements, However