Question
Which of the following is not an important advantage of the net present value (NPV) method over the internal rate of return (IRR) method in
Which of the following is not an important advantage of the net present value (NPV) method over the internal rate of return (IRR) method in evaluating capital investment proposals?
Multiple Choice
NPV facilitates comparisons of mutually exclusive projects requiring different amounts of initial investments.
NPV facilitates comparisons among mutually exclusive projects that have the same useful life but different initial outlays.
NPV can be used to determine an optimum capital budget under conditions of capital rationing, while IRR cannot.
NPV is relatively intuitive (compared, for example, to IRR).
IRR relies on discounted cash-flow analysis, while NPV does not.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started