Which of the following methods uses the time value of money for capital investment analysis?
A)Average investment
B)Net present value method
C)Payback method
D)Accounting rate-of-return method

Question

Quizplus · Accepted Answer

The net present value method takes into account the time value of money by discounting all cash flows to their present value using a chosen rate of return. This allows for a more accurate analysis of the profitability of a capital investment project. The other methods mentioned do not use time value of money calculations.

Which of the Following Methods Uses the Time Value of Money