Question

Which of the following profitability measures is most commonly used to compare mining projects of different sizes and lives?

• A. Payback Period
• B. Accounting Rate of Return
• C. Net Present Value
• D. Profit Margin

Hint:

A project is economically acceptable when \[ \boxed{\mathrm{NPV}>0.} \] Among competing projects, the one with the higher NPV is generally preferred.

Answer 1

The Correct Option is C

Step 1: Recall the purpose of Net Present Value (NPV). NPV discounts all future cash inflows and outflows to their present values.

Step 2: State why it is preferred. Because it considers both the time value of money and the total project life, NPV is widely used to compare mining projects of different sizes and durations. Hence, \[ \boxed{\text{Net Present Value (NPV)}} \] is the correct answer. Therefore, \[ \boxed{(C)} \] is the correct answer.