Which of the following statements correctly describes a strength associated with the financial project selection model?
A) The benefit-to-cost models favor projects which generate the largest absolute return over a specified period.
B) Payback period models most accurately consider the profit to be realized after the costs are paid.
C) The Net Present Value (NPV) method considers the time value of money.
D) The Internal Rate of Return (IRR) method is easiest to use when a project has non-conventional cash flows.

Question

Quizplus · Accepted Answer

The Net Present Value (NPV) method considers the time value of money, which is a key strength as it takes into account the fact that money that is received or paid out in the future is worth less than money received or paid out today. This is because money sitting in the bank today can earn interest and grow over time, making it more valuable than money received or paid out in the future. The other statements are either inaccurate or not related to the strength of financial project selection models.

Which of the Following Statements Correctly Describes a Strength Associated