The NPV method quickly determines the discount rate that changes an accept decision into a reject decision and vice versa.

Question

Quizplus · Accepted Answer

The NPV method calculates the net present value of a project's cash flows at a specific discount rate, not the discount rate itself. The IRR (Internal Rate of Return) method is used to find the discount rate that makes the NPV equal to zero, changing an accept decision into a reject decision and vice versa.

The NPV Method Quickly Determines the Discount Rate That Changes