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MCQ Detailed View

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1 FINANCE MCQS

Projects that are mutually exclusive but differ in scale or completion time are compared using ____________?

  • External return method
  • Net present value method
  • Net future value method
  • Internal return method
Correct Answer: B. Net present value method

Detailed Explanation

When projects are mutually exclusive and differ in scale or completion time, the Net Present Value (NPV) method is considered the most appropriate for comparison. NPV measures the absolute value addition to the firm and is not affected by project size or timing distortions like IRR.

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