Which statement about NPV is true? A) The NPV method was once the favorite of bu

Question

Which statement about NPV is true?

A) The NPV method was once the favorite of business executives, but today is more popular.

B) The NPV method is regarded as being the best indicator of profitability, hence most firms use only this method

C) A project's NPV depends on the total amount of cash flows the project produces, but because the cash flows are discounted at the WACC, it does not matter if the cash flows occur early or late in the project's life.

D) The NPV and IRR methods may give different recommendations regarding which of two mutally exclusive projects should be accepted, but they always give the same recommendation regarding the acceptability of a normal, independent project.

Explanation / Answer

b. b. The NPV method is regarded as being the best indicator of profitability , hence most firms use only this method.

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