The rate of return and payback methods DO NOT take into consideration the time value of money. Discounted cash flow methods DO make use of the time value of money.

Question

Quizplus · Accepted Answer

The statement is correct. The rate of return and payback methods do not consider the time value of money, while discounted cash flow methods, such as net present value (NPV) and internal rate of return (IRR), take into consideration the time value of money by discounting future cash flows.

The Rate of Return and Payback Methods DO NOT Take