Here we're establishing the issue of reinvestment. If we treat the first investment as our benchmark, it gives a decent RR of 15.2%, and we've committed to being invested for a full five years. On the face of it, investment two looks more attractive as it generates a higher RR at an extremely attractive 31.9%. However, you would need to ask yourself the question, what am I going to do at the end of year two? I'll almost certainly want to reinvest for years three, four, and five. However, will I be able to identify further investment that will generate attractive returns for me? In fact, I'm concerned that when I come to the end of year two, I'll only be able to identify investments returning my 7% discount rate. That unknown represents the reinvestment risk inherent into the shorter investment too, which is something that's not reflected in the IRR. In contrast, the NPV assume you can reinvest your money at the 7% discount rate, making it a superior investment technique.