Discussion Prompt
You have just sat through an informative lecture in your managerial accounting class about the net present value (NPV). However, one of your classmates leaned over to tell you that he is still unclear about this theory and would like for you to provide a summary of what this concept is all about and why it is so important. Explain to your classmate the key arguments for using NPV over other capital investment approaches and why it is the preferred method for making decisions about long-term investment opportunities.
