A is corrent. The net present value consistently provides the best solutions even when considering mutually exclusive projects.
B is incorrect. The accounting rate of return does not consider the time value of money.
C is incorrect. The payback method has a number of limitations including the fact that it does not consider the total profitability of the project and does not consider the time value of money.
D is incorrect. Even though the internal rate of return method considers the present value of cash flows, it assumes that cash flows can be reinvested at the internal rate of return. Therefore, it may not arrive at the best solution in all cases.
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