The net present value method is a better method of evaluation than the internal rate of return method because

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The NPV method discounts cash flows at the firm's more conservative cost of capital, taking into account the specific risk of the investment. In contrast, the IRR method assumes reinvestment of cash flows at the same rate of return, which may not be realistic. Therefore, the NPV method is generally considered a better method of evaluation.

The Net Present Value Method Is a Better Method of Evaluation