Because many projects may be competing for the same investment dollars and may have different useful life expectancies,all costs and benefits must be viewed in relation to their present rather than future value when comparing investment options.

Question

Quizplus · Accepted Answer

Present value analysis is a common method used in finance and investment decision-making. It takes into account the time value of money, which means that money received in the future has less value than money received today. By converting all costs and benefits into their present values, investment options with different useful life expectancies can be compared fairly. This helps ensure that the most profitable investment option is chosen.

Because Many Projects May Be Competing for the Same Investment