NPV and IRR are popular ways to measure the return of an investment project. Learn how net present value and internal rate of return are used to determine the potential of a new investment.

Capital rationing is the constraint on your spending due to limited funds. The net present value, or NPV, investment appraisal method helps you choose which projects to adopt within your constraints.

Simple capital rationing problems are usually solved by ranking projects according to NPV, Profitability Index, and/or IRR and then selecting all available projects given budgetary constraints.