An understanding of the present value of a future dollar is important when one is using
A)the payback period method.
B)discounted cash flow techniques.
C)the accounting return on investment technique.
D)the investment outlay valuation technique.

Question

Quizplus · Accepted Answer

The present value of a future dollar is important in discounted cash flow techniques, as these techniques involve discounting future cash flows back to their present value. The other methods listed (payback period, accounting return on investment, and investment outlay valuation) do not rely explicitly on present value calculations.

An Understanding of the Present Value of a Future Dollar