The net present value method is considered the most theoretically correct decision criteria because of all the
Question:
The net present value method is considered the most theoretically correct decision criteria because of all the following EXCEPT:
1- it allows the comparison of benefits and costs of a project's estimated cash flows in a logical manner through the use of time value of money principles
2- It requires a detailed forecast of a project's future expected cash flows (e. benefits and costs) .
3- It assumes all intermittent cash flows can be reinvested at the firm's cost of capital, which is a more realistic reinvestment assumption than a project IRR
4-it provides the dollar amount by which positive (negative) NPV projects will increase (decrease) the value of the firm which is consistent with the goal of shareholder wealth maximization
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips