____ is preferred by most financial theorists because it uses the expected cash flows and applies a minimum rate of return to discount these cash flows into current (present) value dollars.

Question

Quizplus · Accepted Answer

Net Present Value (NPV) is preferred by most financial theorists because it is based on the expected cash flows and applies a minimum cost of capital (rate of return) to discount these cash flows into current (present) value dollars. This method takes into account both time value of money and risk, resulting in a more accurate assessment of the project's profitability. EPS, EPP, and IRR do not take into account the time value of money or risk, and thus are not as accurate as NPV in assessing a project's profitability.

____ Is Preferred by Most Financial Theorists Because It Uses