Which project selection model uses quantitative measures such as NPV and IRR for decision-making?

The selection model that utilizes quantitative measures like Net Present Value (NPV) and Internal Rate of Return (IRR) for decision-making is numeric project selection models. These models are designed to evaluate potential projects based on objective, numerical data, allowing organizations to make decisions grounded in financial analysis and mathematics.

NPV helps in assessing the profitability of a project by calculating the value of future cash flows discounted back to present value. If the NPV is positive, it suggests that the project is likely to generate value, and thus, could be a good investment. On the other hand, IRR provides the rate at which the project's cash flows break even, offering insight into the efficiency of the investment. By relying on these quantitative measures, numeric project selection models provide a structured process for assessing project viability based on financial criteria and therefore facilitate informed decision-making.

Other project selection models mentioned do not primarily focus on quantitative financial metrics. Sacred cow projects refer to initiatives that may be pursued due to the influence of key stakeholders rather than objective data. Operating necessity projects prioritize those that are essential for daily operations, while future net cash flows pertain to expected cash generation from a project but do not represent a structured decision-making model on their own. Consequently, the numeric project selection