why do you think that the npv method choosen by you is the most suitable method in ecaluating the proposed investment?

Business

1 answer:

ArbitrLikvidat [17]3 years ago

3 0

Answer:

Hind Petrochemicals Company

The reason that the NPV method is the most suitable method in evaluating the proposed investment is that

the NPV reduces all the cash outflows and inflows to their present value to assess their relative values vis-a-vis the time value of money.

Explanation:

NPV, therefore, creates a common denominator for project evaluation. If the cash outflows in their present values are more than the cash inflows in their present values, then Hind may need to reconsider its decision to buy the refineries from the government. Using NPV enables Hind Petrochemicals to compute the revenues and costs in their present values and cash flow forms.

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