What is the rationale behind the NPV method? According to NPV, which
QUESTION
What is the rationale behind the NPV method? According to NPV, which project(s) should be accepted if they are independent? Mutually exclusive?
erms of dollars. NPV method assumes that the reinvestment rate of return to be equal to the cost of capital. According to NPV method while evaluating the independent projects a project can be accepted if the net present value from the project is positive. In case of mutually exclusive projects the project which results in highest net present value is accepted.
ANSWER:
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