Which of the following methods consider the time value of money?

Question

Quizplus · Accepted Answer

Internal rate of return and net present value both consider the time value of money by discounting future cash flows back to their present value. Payback and accounting rate of return ignore the time value of money. While payback considers the amount of time it takes to recover the initial investment, it does not take into account any cash flows that occur after the payback period. Accounting rate of return only considers the average annual income generated by the investment, without any adjustment for the timing of those cash flows.

Which of the Following Methods Consider the Time Value of Money