The "gold standard" of investment criteria refers to:
A) net present value.
B) internal rate of return.
C) payback period.
D)profitability index.

Question

Quizplus · Accepted Answer

Net present value (NPV) is considered the gold standard of investment criteria as it takes into account the time value of money and provides the dollar amount of value added to a project or investment. It is a comprehensive measure of the project's worth and takes into account all relevant cash flows. Internal rate of return (IRR) is also a commonly used investment criteria, but it can produce multiple IRRs for complex projects and is less informative than NPV. Payback period and profitability index are less comprehensive measures of investment worth and can lead to incorrect investment decisions if used in isolation.

The "Gold Standard" of Investment Criteria Refers To