The net present value method is preferable over the internal rate of return method when an organization does not require the same rate of return each year of the project.

Question

Quizplus · Accepted Answer

The net present value method takes into account the time value of money and discounts all cash flows to their present value based on a required rate of return. This means that the organization can have varying rates of return each year and it will still accurately reflect the project's profitability. The internal rate of return method assumes that the same rate of return is required each year of the project, which may not always be the case.

The Net Present Value Method Is Preferable Over the Internal