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Advantages: a. It will give the correct decision advice assuming a perfect capital market. It will also give correct ranking for mutually exclusive projects. b. NPV gives an absolute value. c. NPV allows for the time value fo the cash flows. Disadvantages: a. It is very difficult to identify the correct discount rate. b. NPV as method of investment appraisal requires the decision criteria to be specified before the appraisal can be undertaken.

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