Choosing between Investments Using a Comparison of NPVs
Natasha If I have 2 investments and I compare the NPV of both. Which one I prefer? With the biggest NPV?
Choose the Project with the Most Positive NPV
Abraham Ogbeide 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.
Remember to also Consider Options in NPV
Alec Hajinoff, Investor, United Kingdom, Member 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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