Net Present Value (NPV) is widely considered a reliable investment evaluation tool, but there are other investment rules like payback period, internal rate of return (IRR), and profitability index (PI). How do these investment rules differ from each other, and what are the advantages and limitations of using NPV compared to the other methods? Additionally, in what scenarios would you prioritize the use of one investment rule over another when making investment decisions? Provide real-life examples to support your arguments.

Answer rating: 100% (QA)

Net Present Value NPV Payback Period Internal Rate of Return IRR and Profitability Index PI are all used to evaluate investment opportunities but they differ in their approach and what they prioritize ... View the full answer