Which of the following criteria represents the dollar amount of change in the value of the firm as a result of choosing a decision?
A)net present value
B)payback period
C)return on investment
D)internal rate of return

Question

Quizplus · Accepted Answer

Net present value (NPV) measures the dollar amount of change in the value of the firm as a result of choosing a decision. It takes into account the time value of money and represents the difference between the present value of cash inflows and the present value of cash outflows. Payback period, return on investment, and internal rate of return represent other criteria used in capital budgeting, but do not directly measure the dollar amount of change in the value of the firm.

Which of the Following Criteria Represents the Dollar Amount of Change