Which of the following statements is CORRECT?
A) The payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects.
B) The discounted payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects.
C) The net present value method (NPV) is generally regarded by academics as being the best single method for evaluating capital budgeting projects.
D) The modified internal rate of return method (MIRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects.
E) The internal rate of return method (IRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

Question

Quizplus · Accepted Answer

The net present value (NPV) method is generally regarded as the best single method for evaluating capital budgeting projects as it considers the time value of money and takes into account all cash flows (both inflows and outflows) associated with a project, giving a more accurate estimation of the project's profitability. The other methods mentioned have limitations or weaknesses, such as the lack of consideration of the time value of money (payback and discounted payback), the reliance on an arbitrary reinvestment rate (IRR), or the potential for multiple rates of return (MIRR).

Which of the Following Statements Is CORRECT