Which method for evaluating capital investment proposals reduces the expected future net cash flows originating from the proposals to their present values and computes a net present value?

Question

Quizplus · Accepted Answer

Net present value (NPV) method reduces future cash flows to their present value, taking into account the time value of money, and compares the sum of net present values to the initial investment. This provides a more accurate measure of the profitability of the investment proposal.

Which Method for Evaluating Capital Investment Proposals Reduces the Expected