As compared to the internal rate of return (IRR), the net present value (NPV) technique of capital budgeting is considered a better measure of profitability because:
A. the internal rate of return (IRR) does not allow you to determine if the project is acceptable.
B. the net present value (NPV) is the only method that allows you to determine which independent project is acceptable.
C. the net present value (NPV) technique gives a direct measure of the dollar benefit (on a present value basis) tothe firm's shareholders.
D. the internal rate of return (IRR) for a project is different for each firm.
E. the net present value (NPV) contains information about a projects "safety margin," which is not inherent in the internal rate of return (IRR).
Answer: C
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