The computations required for the net present value method are more than the computation required for the average rate of return method.

Question

Quizplus · Accepted Answer

The net present value method requires more computations as it involves discounting cash flows to their present value and summing them up to get the net present value. On the other hand, the average rate of return method only requires the calculation of a simple average, which is relatively simpler.

The Computations Required for the Net Present Value Method Are