Net present value method is a capital budgeting technique that helps to minimize some of the shortcomings of the payback method by

Question

Quizplus · Accepted Answer

The net present value method recognizes all future cash flows beyond the payback period by discounting them to their present value. This helps to provide a more accurate picture of the project's profitability over its entire life span and is therefore a significant improvement over the payback method. Option A and D are incorrect as they do not completely address the shortcomings of the payback method. Option B is incorrect as it is not related to the net present value method.

Net Present Value Method Is a Capital Budgeting Technique That