How to choose with project to use by NPV;
- If it is predicted to have a positive NPV, it should be accepted.
- If choosing between two, the higher NPV should be chosen.
- If the present values of the inflows is less than present value of outflows, then is should be rejected.
Advantages; - Takes into account time value of money
Disadvantages; - Doesn't take into account the speed of repayment
- Can be difficult to choose the correct discount factors
- Concept may be hard to understand for non-financial managers.
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