Answer:
Is the best method of analyzing mutually exclusive projects.
Step-by-step explanation:
Net present value is equal to the present value of all the future cash flows of a project, less the initial outlay of project.
Net present value analysis simply concluded about a project to be worth doing when it finds the present value of future cash flows greater than the initial investment and vice versa.
We just have to see which is higher, the present value of future cash flows or the initial investment.
It is assumed that an investment with a positive NPV will be profitable, and an investment with a negative NPV will result in a net loss.