An important advantage of the net present value method of capital budgeting over the internal rate-of-return method is:
A)the net present value method is expressed as a percentage
B)the net present values of individual projects can be added to determine the effects of accepting a combination of projects
C)There is no advantage.
D)Both A and B are correct.

Question

Quizplus · Accepted Answer

The net present value method allows for the straightforward addition of the net present values of individual projects to assess the overall impact of accepting multiple projects, which is not possible with the internal rate-of-return method.

An Important Advantage of the Net Present Value Method of Capital