IRR Overstates Project's True Value

From The McKinsey Quarterly:

"Many executives use the internal rate of return as the measure of a proposed project's long-term value. This approach does have intuitive appeal, but the complicated model used to calculate the internal rate of return makes certain assumptions that exaggerate a project's true value. The higher the return, the worse the distortion...

Companies and their advisers use the internal rate of return at their peril. A modified version that sets more realistic interim return rates would be vastly preferable, but the best alternative measure is net present value."