Which project selection model includes metrics like internal rate of return and net present value?

The choice that includes metrics like internal rate of return (IRR) and net present value (NPV) is grounded in financial analysis, which is a fundamental aspect of numeric project selection models. These models are quantitative in nature and are designed to evaluate the potential financial returns of various projects through established financial metrics.

Internal rate of return provides the rate at which the present value of future cash flows from a project equals the initial investment, allowing decision-makers to assess the profitability of a project relative to cost. Similarly, net present value calculates the difference between the present value of cash inflows and outflows over time, indicating the added value a project is expected to generate.

These financial metrics help organizations make informed choices about which projects are likely to yield the best returns and align with overall business objectives. In contrast, the other models mentioned do not focus on quantitative financial metrics. For example, project selection methods like payback period modeling primarily assess how quickly initial investments can be recouped without deeper financial evaluations like IRR and NPV. Operational necessity assessment focuses on the urgency and necessity of projects rather than financial viability, while sacred cow evaluation prioritizes projects that are politically or emotionally favored within an organization without financial analysis. Thus, numeric project selection models