The formula used in the rate of return approach to determine whether an investment is worthwhile is the same formula used in the present value approach.

Question

Quizplus · Accepted Answer

The rate of return approach typically uses the internal rate of return (IRR) formula to evaluate the profitability of an investment, while the present value approach uses the net present value (NPV) formula to determine the present value of future cash flows minus the initial investment.

The Formula Used in the Rate of Return Approach to Determine