Page 349 - F2 - MA Integrated Workbook STUDENT 2018-19

Capital budgeting

4.2 Advantages and disadvantages of NPV

 Considers the time value of  Complex

money
 Not well understood by

 Measures absolute non-financial managers
profitability
 Need the cost of capital
 Uses cash flow

 Considers the whole life of
the project

 Should maximise shareholder
wealth

341