The Net Present Value (NPV) Method for Making Investment Decisions

Multiple Choice

The Net Present Value (NPV) method for making investment decisions has the following advantages over the Internal Rate of Return (IRR) method:

A) NPV considers the decision-maker's required rate of return when evaluating cash flows
B) NPV considers the size of a project whereas IRR does not
C) NPV assumes the same reinvestment rate for all projects, thereby being a correct measure of the true opportunity cost of a project
D) All of the above are true
E) A and B only