In situations where a firm specifies to different required rates of return (i.e. ,discount rates)over the years,it is advantageous to use:

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The net present value method takes into account the time value of money by discounting future cash flows to their present value using the required rate of return. Therefore, if a firm specifies different required rates of return over the years, the NPV method is a better choice compared to the other methods listed. The payback method and book rate of return method do not consider the time value of money, while the IRR method assumes a constant discount rate over the life of the project, which is not the case in this scenario. Sensitivity analysis can be used in conjunction with the NPV method to determine the impact of changes in the required rate of return on the project's viability.

In Situations Where a Firm Specifies to Different Required Rates