measures the worth of a stream of cash flows, taking into account the time value of money.
A) Accounting rate of return
B) Net present value
C) Internal rate of return
D) Adjusted present value

Question

Quizplus · Accepted Answer

Net present value is the only measure that takes into account the time value of money. It considers the future cash flows and discounts them back to their present value using a discount rate. This allows for a more accurate comparison of the value of different cash flow streams over time. The other options, accounting rate of return, internal rate of return, and adjusted present value, do not take into account the time value of money in the same way.

Measures the Worth of a Stream of Cash Flows, Taking