Is the Net present value the best relvant method for evaluating a project?

Question

Is the Net present value the best relvant method for evaluating a project?

Answer 1

Yes, I believe it is. I'll be paraphrasing my textbook here somewhat.

The net present value is usually simpler to use than the internal rate of return method. The IRR method involves searching for the discount rate that makes NPV = 0.

After that, I have a lengthy paragraph explaining how one of the assumptions in the IRR method is questionable.

The final quote is: "... when the NPV method and the IRR method do not agree concerning the attractiveness of a project, it is best to go with the NPV method. Of the two methods, it makes the more reliable assumption about the rate of return that can be earned on cash flows from the project."

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The lengthy paragraph makes sense, but is a bit too lengthy for me to type in here - plus I don't care to just copy things out of my text...