Which of the following best explains why the net present value method of capital budgeting is preferred over the internal
the net present value method is expressed as a percentage of initial investment
the calculation under the net present value method is easy as it does not use time value of money
the percentage return computed under the net present value method is very easy to compare
the net present values of individual projects can be added to determine the effects of accepting a combination of projects
Option D: The NPVs of individual projects can be added to determine the effects of accepting a combination of projects
Net Present Value (NPV) refers to difference of present value of cash inflows and present values of cash outflows.
Following points are relevant in regard to NPV:
Option 'D' is correct and rest all are incorrect.
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