Identify one primary strength and one primary weakness for each of

Identify one primary strength and one primary weakness for each of the following methods of investment analysis: 

 

Net present value 

Internal rate of return:

Payback Period:                                                                                                 

Average accounting return:                                                                             



honeyd


16-09-20 | 18:56:39

NPV advantage: Account for the time value of money disadvantage: sometimes it need guesswork about forms cost of capital IRR Advantage: do not need cost of capital guessing yet it has time value of money weakness: assume cashflow are reinvested at internal rate of return which may not be true payback period advantage: easy to calculate disadvantage: do not consider time value of money Average accounting return advantage: easy to calculate disadvantage:do not consider time value of money

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