A local marketing firm is considering launching a new and extensive social media marketing campaign. This investment of resources is being looked at for the duration of the project since it is anticipated to last at least 5 years. What financial calculation should be used to compute the investment's value, taking into account the time value of money?
A) ROI
B) NPV
C) EVA
D) IRR
E) TCO

Question

Quizplus · Accepted Answer

NPV (net present value) should be used to compute the investment's value, as it takes into account the time value of money by discounting future cash flows to their present value. This is appropriate for a long-term investment like a social media marketing campaign that will last at least 5 years. ROI (return on investment) measures the profitability of an investment but does not account for the time value of money, while EVA (economic value added) and IRR (internal rate of return) also take into account the cost of financing but may not be necessary for this specific project. TCO (total cost of ownership) is more commonly used to calculate the cost of owning and operating an asset over its lifespan, and may not be applicable to a social media marketing campaign.

A Local Marketing Firm Is Considering Launching a New and Extensive