**6. Discussion and conclusion**

Research conducted by Pšunder and Ferlan (2007) about knowledge of faults in investment project evaluation methods shows that, regardless of the field of education, non-discounting methods are still more popular than discounting methods. The research also shows that experts who have an education in mechanical engineering and are involved in investment project evaluation are more likely than average to use discounting methods. They also possess above-average knowledge about deficiencies in investment project evaluation methods. In using the internal rate of return method, experts with an education in mechanical engineering are most familiar with multiple internal rate of return. The level of familiarity with the multiple internal rate of return is above average, most probably because big projects in the field of mechanical engineering are, owing to variable cash flow, typically subject to multiple internal rate of return.

Discounting methods are far more precise in advice about investment projects than nondiscounting methods; however, the discounting methods have their flaws and drawbacks, as well. In particular, internal rate of return has numerous drawbacks that can lead to incorrect conclusions. The most frequent drawbacks involve multiple internal rates of return, reinvestment assumptions and non-additive projects.

These drawbacks of the internal rate of return method are the reason that the net present value method is the better method of the two. It is easy to calculate, but results are harder to understand in comparison to the percentage from the internal rate of return method. It certainly may be difficult to compare the result with alternative investments.

The discount rate is a key factor in proposed project analysis. The size of the discount rate can greatly influence decisions about an investment, since even small changes in the discount rate can dramatically change a decision about the acceptance or rejection of an investment. This is why its determination needs experience and should not be left to practice-based approximations. The proper application of the net present value method is based on the accuracy of the applied discount rate. Recent research shows that experts' opinions about risk free rate are quite unified, but not by the risk premium (Pšunder and Cirman, 2011).

Despite the wide use of discounting methods, there is still incomplete knowledge about them. To ensure the reliability of discounting methods, project managers must be acquainted with the deficiencies and drawbacks of the methods, particularly of the internal rate of return method. With the net present value method, it is vital to apply professionally proven methods when establishing the discount rate. Only this will ensure that the results of the analysis will be reliable and credible.
