The net present value method (NPV) is a more conservative technique for selecting investment projects than the internal rate of return method because the NPV method

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The NPV method assumes that cash flows are reinvested at the firm's weighted average cost of capital (WACC), which is a more conservative approach because it assumes that the firm is earning a return that reflects the cost of its capital. On the other hand, the internal rate of return method assumes that cash flows are reinvested at the project's internal rate of return (IRR), which may not reflect the actual return that the firm can earn on its investments. Additionally, the NPV method takes into account the time value of money, and therefore, is a more accurate measure of the profitability of an investment project.

The Net Present Value Method (NPV) Is a More Conservative