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Please discuss the pros and cons of all methods (payback period, NPV, IRR) that we can...

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Finance

Please discuss the pros and cons of all methods (payback period,NPV, IRR) that we can use to decide whether the project can beexecuted or not. Please explain which method is best and the reasonfor your choice.

Answer & Explanation Solved by verified expert
4.2 Ratings (608 Votes)
NPV strengths 1 it factors in time value of money 2 It includes risk involves in generating cash flow 3 It is good in evaluating project involving large investment is of large scale projects 4 Here reinvestment rate is discount rate or WACC which is lower than IRR 5 It helps in ranking    See Answer
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