The decision to make long-term capital investments is best evaluated using discounting techniques that recognize the time value of money.

Question

Quizplus · Accepted Answer

Evaluating long-term capital investments using discounting techniques that account for the time value of money is essential because it considers the future cash flows associated with the investment and reduces them to their present value. This method helps determine the profitability of the investment by comparing its present value to the initial investment or cost of capital.

The Decision to Make Long-Term Capital Investments Is Best Evaluated