Which of the following investment rules has the value additivity property?
A)The payback period method
B)The net present value method
C)The book rate of return method
D)The internal rate of return method

Question

Quizplus · Accepted Answer

The net present value method has the value additivity property, meaning that the total net present value of a project is equal to the sum of the net present values of each individual cash flow. This allows for easy comparison and decision making between different investments. The other methods listed do not have this property, as they rely on other factors such as the payback period or accounting measures of profitability.

Which of the Following Investment Rules Has the Value Additivity