In trying to decide on whether or not to invest in a new project,the CEO of Foxeye Limited said she wanted to consider how long it takes to recover the investment,the risk,and the time value of money.It sounds like she should use
A) real options.
B) a portfolio analysis.
C) Q-sort.
D) a discounted cash flow method.

Question

Quizplus · Accepted Answer

The CEO's concerns regarding the time value of money and investment recovery indicate that a discounted cash flow method would be most appropriate. This method takes into consideration the future cash inflows and outflows associated with a project and discounts them back to their present values, thus allowing for an assessment of the project's net present value and potential return on investment. Real options, portfolio analysis, and Q-sort may also be useful tools in investment decision-making, but they do not specifically address the CEO's stated concerns.

In Trying to Decide on Whether or Not to Invest