The Liberty Co. is considering two projects. Project A consists of building a wholesale book outlet on lot #169 of the Englewood Retail Center. Project B consists of building a sit-down restaurant on lot #169 of the Englewood Retail Center. When trying to decide whether to build the book outlet or the restaurant,management should rely most heavily on the analysis results from the _______ method of analysis.
A) profitability index
B) internal rate of return
C) payback
D) net present value
E) accounting rate of return

Question

Quizplus · Accepted Answer

Net present value (NPV) is the most reliable method for evaluating projects as it considers the time value of money and provides a direct measure of the expected increase in value from the project.