The ________ model is usually considered the best of the capital budgeting decision-making models.
A)internal rate of return (IRR)
B)net present value (NPV)
C)profitability index (PI)
D)discounted payback period

Question

Quizplus · Accepted Answer

The net present value (NPV) model is typically considered the best capital budgeting decision-making model because it takes into account the time value of money, provides a dollar amount to compare to the initial investment, and considers all cash flows over the life of the project. The other models mentioned (IRR, PI, and discounted payback period) have their own advantages and disadvantages, but NPV is generally preferred.

The ________ Model Is Usually Considered the Best of the Capital