The discounted payback method, net present value method (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI) are all consistent with the the time value of money.

Question

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All of these methods take into consideration the time value of money, which is the idea that money today is worth more than money received in the future due to inflation and the opportunity cost of not having that money available to invest or earn interest. The methods involve discounted cash flows and calculate the present value of future cash flows to determine the profitability of an investment.

The Discounted Payback Method, Net Present Value Method (NPV), Internal