Which of the following differentiates the net present value (NPV) from the internal rate of return (IRR)?
- The NPV considers the time value of money, whereas the IRR does not consider the time value of money.
- The NPV is a discounting model, whereas the IRR is a nondiscounting model.
- The NPV measures profitability in absolute terms, whereas the IRR measures profitability in relative terms.
- The NPV assumes that each cash inflow received is reinvested at a discount, whereas for the IRR, it is reinvested at the required rate of return.