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What Are The Disadvantages Of NPV As An Investment Criterion?

April 26, 2017criterion disadvantages Investment npv

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What Are The Disadvantages Of NPV As An Investment Criterion?

1 Answer

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10 Posted

The major disadvantage is that NPV calculation is based on discount rates and the future discount rates have to be estimated which means that if there are unexpected changes n the discount rate, the NPV value will become very different form what was initially expected.