An advantage of the net present value method is that

Question

Quizplus · Accepted Answer

The net present value method has an explicit decision rule of accepting a project if the calculated NPV is positive and rejecting it if the calculated NPV is negative. This makes it a clear and straightforward tool for making investment decisions. Option A is incorrect because the NPV calculation can be complex, especially for projects with multiple cash flows. Option B is incorrect because the time value of money is a critical factor in the NPV calculation. Option D is incorrect because inflation needs to be factored into the calculation to ensure that future cash flows are expressed in today's dollars.

An Advantage of the Net Present Value Method Is That