Register now or log in to join your professional community.
In investment appraisals "most" of the times following method gives the decisive answer go ahead with the project or do not go for it, and is widely used? a. pay back method b. discounted pay back method c. IRR d. NPV
Option (D) NPV.
Reason being: Pay back method just gives an indication of time in which intial outlay will be recovered. Discounted pay back is similar to simple payback only difference is the inflows are discounted result is again the same i.e. the period in which inital outlay is recovered. IRR gives the indication at which your investment will breakeven, one cannot accept the rate below IRR. In case of NPV one can find out the total impact of investment over the period of investment in total be it -ve or +ve, thus making it more beneficial and clear method to rely on while investing the funds.
NPV gives more decisive views but other methods MIRR cannot be ignore at all
d. NPV
