Which of the following are present value methods of analyzing capital investment proposals?

Question

Quizplus · Accepted Answer

Both net present value and internal rate of return are present value methods of analyzing capital investment proposals. Net present value calculates the present value of expected cash inflows minus the present value of expected cash outflows, while internal rate of return calculates the discount rate at which the net present value of an investment equals zero. Option A is incorrect because average rate of return is not a present value method, while option B is incorrect because net present value is a present value method, but average rate of return is not. Option D is incorrect because payback is not a present value method.

Which of the Following Are Present Value Methods of Analyzing