The merits are of the NPV criterion for evaluating investment projects include that it takes cognisance of all cash inflows
that will accrue from the investment, timing of cash flows is incorporated in its computation and that it encourages long
term investments that will have cash flows running into the distant future since an acceptable rate will be used to
equilibrate such distant values with present values. In addition, it eliminates the problem of multiple rates that is associated
with the internal rate of return criterion (Emekekwue, 2009). However, this method of investment appraisal has some
setbacks. First, it assumes the existence of an acceptable discount rate (i.e., cost of capital). The cost of capital is likely to
The merits are of the NPV criterion for evaluating investment projects include that it takes cognisance of all cash inflowsthat will accrue from the investment, timing of cash flows is incorporated in its computation and that it encourages longterm investments that will have cash flows running into the distant future since an acceptable rate will be used toequilibrate such distant values with present values. In addition, it eliminates the problem of multiple rates that is associatedwith the internal rate of return criterion (Emekekwue, 2009). However, this method of investment appraisal has somesetbacks. First, it assumes the existence of an acceptable discount rate (i.e., cost of capital). The cost of capital is likely to
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