When considering the time value of money, which of the following four methods of project evaluation would appear to be the least satisfactory?
A) internal rate of return
B) profitability index
C) net present value
D) payback period method

Question

Quizplus · Accepted Answer

The payback period method does not take into account the time value of money, making it the least satisfactory method when considering the time value of money. This method only considers the time it takes for a project to generate enough cash flows to recover its initial investment. It does not consider the timing or size of cash flows beyond the payback period, resulting in a limited view of a project's profitability. The other three methods (internal rate of return, profitability index, and net present value) all take into account the time value of money and provide a more comprehensive evaluation of project profitability.

When Considering the Time Value of Money, Which of the Following