Editing Net present value (section)

====Relies on choice of discount rate and discount factor====
The accuracy of the NPV method relies heavily on the choice of a discount rate and hence [[Discounting|discount factor]], representing an i[[Risk premium|nvestment's true risk premium]].<ref>{{Cite web |title=Disadvantages of Net Present Value (NPV) for Investments |url=https://www.investopedia.com/ask/answers/06/npvdisadvantages.asp |access-date=2022-04-30 |website=Investopedia |language=en}}</ref> The discount rate is assumed to be constant over the life of an investment; however, discount rates can change over time. For example, discount rates can change as the cost of capital changes.<ref>{{Cite web |last=Damodaran |first=Aswath |date=21 April 2023 |title=Cash Flow and Discount Rates |url=https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr21/session4slides.pdf |access-date=21 April 2023 |website=New York University}}</ref><ref name=":0" /> There are other drawbacks to the NPV method, such as the fact that it displays a lack of consideration for a project’s size and the [[cost of capital]].<ref>{{Cite journal |last1=Fioriti |first1=Davide |last2=Pintus |first2=Salvatore |last3=Lutzemberger |first3=Giovanni |last4=Poli |first4=D. |date=2020-06-01 |title=Economic multi-objective approach to design off-grid microgrids: A support for business decision making (comparison of different economic criteria) |url=https://www.researchgate.net/publication/342147652 |journal=Renewable Energy |doi=10.1016/j.renene.2020.05.154|s2cid=224855745 }}</ref><ref name=":1" />