Which of the following is a method of analyzing capital investment proposals that ignores present value?

Question

Quizplus · Accepted Answer

The method of analyzing capital investment proposals that ignores present value is the average rate of return, which calculates the average annual net income from an investment as a percentage of the initial investment. This method does not consider the time value of money or the timing of cash flows. Internal rate of return, net present value, and discounted cash flow all involve the consideration of present value in their calculations.

Which of the Following Is a Method of Analyzing Capital