Choosing between Investments Using a Comparison of NPVs

Net Present Value (NPV)
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If I have 2 investments and I compare the NPV of both. Which one I prefer? With the biggest NPV? (...) Read more? Sign up for free

  Abraham Ogbeide

Choose the Project with the Most Positive NPV

Yes, if both investments have positive NPVs, then the idea is to take the one with the highest positive NPV. But if both have negative NPV then do none of both. Why? The background of this, is to maximise the shareholders wealth.

  Alec Hajinoff
Investor, United Kingdom

Remember to also Consider Options in NPV

Careful: Did you consider options (expand/abandon) in your NPV calc?
If not, do so, because a lower NPV now may be a higher overall NPV with options included.


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