Choosing between Investments Using a Comparison of NPVs

Net Present Value (NPV)
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Natasha

Choosing between Investments Using a Comparison of NPVs

If I have 2 investments and I compare the NPV of both. Which one I prefer? With the biggest NPV?

  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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