Answer:
Explanation:
(A) Correct√
NPV is the best method of analyzing mutually exclusive projects. Mutually exclusive projects are projects from which one - the most valuable/profitable - is chosen. Net present value takes into consideration, the difference between the present and the future value of a current investment plan or project. For projects which can rightly replace one another (mutually exclusive projects), the best method of analyzing their value/return/profitability is the Net Present Value.
(B)
NPV is not less useful than IRR when comparing different sized projects
(C) Correct√
Net Present Value can be said to be the easiest method of project evaluation for nonfinancial managers because it is easy to understand and to calculate. The net present cash inflow and cash outflow, the discount rate, and the time are computed in the net present value.
(D)
NPV is not less useful than Profitability Index when comparing mutually exclusive projects
(E)
Net Present Value is similar but not VERY similar in methodology, to the AAR. The similarity is not deep because Average Accounting Return does not take into consideration, the time value of money!
