Net present value (NPV) is considered a theoretically correct method and is also often the preferred investment selection method in practice.

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Net present value (NPV) is a widely used and theoretically correct investment selection method that considers the time value of money, and it also takes into consideration the initial investment, expected cash flows, and the required rate of return. Therefore, many financial analysts and investors prefer to use NPV to evaluate investment opportunities.

Net Present Value (NPV) Is Considered a Theoretically Correct Method