In making a capital budgeting decision, one needs to compare cash flows in terms of their amounts and when they occur.One way to do so is to determine their
A)future value.
B)present value.
C)average cash outflows.
D)opportunity costs.

Question

Quizplus · Accepted Answer

To compare cash flows in terms of their amounts and when they occur, it is necessary to determine their present value. This involves discounting the cash flows by an appropriate rate of return to account for the time value of money. This allows for a more accurate comparison of the cash flows and helps to make better capital budgeting decisions. Therefore, option B is the best choice.

In Making a Capital Budgeting Decision, One Needs to Compare