Which of the following methods is described as follows: "It calculates the expected monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time using the required rate of return"?
A) payback method
B) accrual accounting rate-of-return method
C) internal rate of return
D) net present value method

Question

Quizplus · Accepted Answer

The method described is the net present value method. It takes into account the time value of money by discounting the cash flows to their present values using the required rate of return. The project is accepted if the net present value is positive, indicating that the project will yield a return greater than the required rate of return.

Which of the Following Methods Is Described as Follows: "It