ADVANTAGES
It takes into account the time value of money.
It focuses attention on the objective of maximization of the wealth of the project.
It considers the cash flow stream over the entire life of the project.
It is highly useful in case of mutually exclusive projects.
This method is most suitable when cash inflows are not uniform.
This method is generally preferred by economists
DISADVANTAGES
It involves complicated calculations.
It is difficult to select the discount rate.
This method is not suitable in case of projects involving different amounts of investment.
The relative desirability of project will change with a change in the discount rate.
Not suitable in case of two projects having different useful lives.
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