The time value of money is ignored by which method?
A) The internal rate of return method.
B) The simple rate of return method.
C) The net present value method.
D) Both the internal rate and simple rate of return methods.

Question

Quizplus · Accepted Answer

The simple rate of return method ignores the time value of money by only considering the initial investment and the expected returns without considering the timing of those returns. The other methods, internal rate of return and net present value, both take into account the time value of money through discounting cash flows to their present value.

The Time Value of Money Is Ignored by Which Method