The net present value (NPV) method is considered to be a better method of evaluation than the internal rate of return (IRR) method because the NPV method

Question

Quizplus · Accepted Answer

The NPV method is considered superior because it assumes that cash flows can be reinvested at the firm's cost of capital, which is generally more conservative and realistic compared to the IRR method's assumption of reinvesting at the internal rate of return itself.

The Net Present Value (NPV) Method Is Considered to Be