04. (a) "For most investment decisions that a firm faces. NPV is either a superior decision criterion or
at least it is considered a good technique to decide for investment. What are your considerations? Do
you think that other techniques can also provide better results while taking investment decision? If
Yes, please elaborate.
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NPV is either a superior decision criterion
Explanation:
NPV shows the time value of money and is suitable to be applied in cash inflows or cash flows at different periods of time
NPV is considered a good technique to decide for investment as it shows the objective of maximum profitability.
For most investment decisions that a firm faces, NPV is either a superior decision criterion as it takes into account the earnings over the entire life of the project.
The NPV method recognises the return on investment with the help of time element.
To know more:
Net present value of project evaluation
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Differentiate Net Present Value Methods, Profitability Index Method and Internal Rate of Return(IRR) technique of capital budgeting?
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