When different projects put different demands on a limited resource, then net present value (NPV) is always the best way to choose the best project.

Question

Quizplus · Accepted Answer

Net present value (NPV) is just one of several methods that can be used to analyze and rank projects. Other methods, such as internal rate of return (IRR) and payback period, may be more appropriate depending on the specific situation and the preferences of the decision maker. Additionally, even if NPV is used, it cannot always determine the best project if the projects have different investment levels or time horizons.

When Different Projects Put Different Demands on a Limited Resource