The capital budgeting technique where estimated future cash flows are discounted back to the present is referred to as
A) the future value method.
B) the internal rate of return.
C) the net present value method.
D) the payback method.

Question

Quizplus · Accepted Answer

The capital budgeting technique described is the net present value method, where future cash flows are converted into present values by discounting them using a given rate. The future value method is used for evaluating investments with a single cash inflow, the internal rate of return is a different method for evaluating investments, and the payback method only looks at how many years it takes to recoup the initial investment.

The Capital Budgeting Technique Where Estimated Future Cash Flows Are