I have a question from my university, hope it's ok to ask it here.
So both NPV and DPP are used to determine the profitability of a project. But what are the advantages/pros of each of them and in what circumstances (or what kind of project) will NPV be valued more than DPP and vice versa?
Thank you for any help you can provide. Saving Changes...
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Wade HarshmanScrum Master| GDITIndianapolis, In, United States
Short answer: use whatever number the decision makers prefer.
Both estimate the time value of money, they just present it in units of cash or units of time. Saving Changes...
I agree with Wade. If decision makers prefer to early returning initial investment due to the organization's financial issues, DPP might be better used to select the right project. But both can also be used at the same time. Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
And when you work with this in the future remember: a project will not give profit. The product/service/result created by the project will give profit. So, when you are assigned to the project take care about the measure of success assigned to the project are rely related to the project not to the product/service/result. Saving Changes...
