A local marketing firm is considering launching a new and extensive social media marketing campaign. This investment of resources is being looked at through the length of the project since it is anticipated to last at least 5 years. What financial calculation should be used to compute the investment's value, taking into account the time value of money?
A) ROI
B) NPV
C) EVA
D) IRR
E) TCO

Question

Quizplus · Accepted Answer

NPV (Net Present Value) takes into account the time value of money by discounting future cash flows back to their present value using a discount rate. This makes it the best choice to compute the investment's value over a 5-year period. ROI (Return on Investment) only considers the ratio of the investment's return to the cost of the investment, while EVA (Economic Value Added) and IRR (Internal Rate of Return) do not account for the time value of money. TCO (Total Cost of Ownership) is not relevant in this situation, as it is typically used to analyze the costs of a product or service over its entire lifecycle, rather than a marketing campaign.

A Local Marketing Firm Is Considering Launching a New and Extensive