Advantages And Disadvantages Of Net Present Value (NPV)

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Advantages Of Net Present Value (NPV)

1. NPV gives important to the time value of money.

2.In the calculation of NPV, both after cash flow and before cash flow over the life span of the project are considered.

3. Profitability and risk of the projects are given high priority.

4. NPV helps in maximizing the firm's value.

Disadvantages Of Net Present Value (NPV)

1. NPV is difficult to use.

2. NPV can not give accurate decision if the amount of investment of mutually exclusive projects are not equal.

3. It is difficult to calculate the appropriate discount rate.

4. NPV may not give correct decision when the projects are of unequal life.

Related Topics
Concept Of NPV, Its Calculation And Decision Rules
Concept And Meaning Of Capital Budgeting Decision

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