The methods of evaluating capital investment proposals can be grouped into two general categories referred to as (1) methods that do not use present values and (2) methods that use present values.

Question

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The methods for evaluating capital investment proposals indeed fall into two broad categories: those that do not consider the time value of money (such as the payback period and accounting rate of return methods) and those that do (such as net present value and internal rate of return methods).

The Methods of Evaluating Capital Investment Proposals Can Be Grouped