The computations involved in the net present value method of analyzing capital investment proposals are more involved than those for the average rate of return method.

Question

Quizplus · Accepted Answer

The net present value method involves discounting future cash flows to their present value, while the average rate of return method simply calculates the average annual profit as a percentage of the initial investment. Therefore, the net present value method is more involved and complex.

The Computations Involved in the Net Present Value Method of Analyzing