Unlike using IRR,selecting projects according to their NPV will always lead to a correct accept-reject decision.

Question

Quizplus · Accepted Answer

NPV accounts for the time value of money and calculates the net present value of cash inflows and outflows in a project. If the NPV is positive, it indicates that the project will generate positive cash flows and the decision should be to accept the project. In contrast, if the NPV is negative, the decision should be to reject the project. Therefore, NPV is a reliable method for making correct accept-reject decisions.

Unlike Using IRR,selecting Projects According to Their NPV Will Always