Which of the following methods helps in choosing the project that maximizes the wealth of shareholders?

Question

Quizplus · Accepted Answer

The net present value (NPV) method takes into account the time value of money and compares the present value of cash inflows to the initial investment. By selecting the project that has the highest NPV, shareholders' wealth is maximized. The accounting rate of return (B) measures the profitability of a project but does not consider the timing of cash flows. The payback period (C) only considers the time it takes to recover the initial investment and does not take into account the total profitability of the project. Variance analysis (D) is a tool for analyzing the difference between actual and budgeted results in a project.

Which of the Following Methods Helps in Choosing the Project