Corporate Finance (FIN 201) Time Value of Money, NPV, and IRR Practice Problems
New York University
Corporate Finance (FIN 201) | Practice Problems

Overview
A practice packet on time value of money, discounting, NPV vs IRR, and interpreting investment decisions.

Key topics
•present and future value steps
•annuity vs perpetuity patterns
•NPV setup and discounting
•IRR interpretation and limitations

Suggested study tasks
•compute PV for a cash flow stream
•set up an NPV with the correct discount rate
•compare two projects using NPV and IRR

Common pitfalls
•discounting in the wrong direction
•using IRR when cash flows change sign
•confusing nominal and effective rates