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When the amount invested differs substantially across projects, NPV is of limited value for comparison purposes....

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Accounting

When the amount invested differs substantially across projects,NPV is of limited value for comparison purposes. You have evaluatedthree projects of substantially different investment amounts usingthe net present value (NPV) method. How would you decide which oneof the projects to select?

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3.9 Ratings (510 Votes)
Net Present value NPV Method It is common we find difficulty to selected the best Investment proposal project from the options available Net present value NPV method is the best method to evaluate each and every options available in order find the best one Net present value method is a popular capital budgeting technique that takes into account the time value of money It uses net present value of the investment project as the base to accept or reject a proposed investment in projects like purchase of new equipment purchase of inventory expansion or addition of existing plant assets and the installation of new plants etc    See Answer
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When the amount invested differs substantially across projects,NPV is of limited value for comparison purposes. You have evaluatedthree projects of substantially different investment amounts usingthe net present value (NPV) method. How would you decide which oneof the projects to select?

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