On a purely theoretical basis, the NPV is the better approach to capital budgeting due to all thefollowing reasons EXCEPT
A) that it measures the benefits relative to the amount invested.
B) that it maximizes shareholder wealth.
C) that there may be multiple solutions for an IRR computation.
D) for the reasonableness of the reinvestment rate assumption.

Question

Quizplus · Accepted Answer

NPV does not measure benefits relative to the amount invested; it measures the absolute value of the net benefits.

On a Purely Theoretical Basis, the NPV Is the Better