Which method is best to help managers make capital investment decisions that will be LEAST costly to the organization?

Question

Quizplus · Accepted Answer

The net present value method is the best choice when aiming to make capital investment decisions that will be least costly to the organization. This method takes into account the time value of money and discounts future cash flows back to their present value. By doing so, it provides a more accurate picture of the profitability of a project than other methods such as the payback method or the unadjusted rate of return method. The non-discounted cash flow method does not consider the time value of money, which can result in inaccurate results. Therefore, the net present value method is the best option for minimizing costs and making informed investment decisions.

Which Method Is Best to Help Managers Make Capital Investment