Which of the following capital budgeting methods ignores the time value of money?
A) Payback period
B) Internal rate of return
C) Net present value
D) Profitability index

Question

Quizplus · Accepted Answer

The payback period method ignores the time value of money because it simply calculates the time it takes for a project to generate cash flows sufficient to recover the initial investment, without discounting those cash flows to their present value.

Which of the Following Capital Budgeting Methods Ignores the Time