Which of the following capital budgeting methods might not consider the salvage value of a machine being considered for purchase?
A) Internal rate of return.
B) Net present value.
C) Payback.
D) Discounted payback.
E) Answers c and d are both correct.

Question

Quizplus · Accepted Answer

The payback and discounted payback methods focus on how quickly an investment can be recouped without considering the salvage value of the asset. These methods primarily look at cash flows up to the point where the initial investment is recovered, ignoring any benefits or returns that occur after this payback period, including the salvage value of the machine.

Which of the Following Capital Budgeting Methods Might Not Consider