Which of the following capital budgeting methods uses discounted cash flows?
A) accrual accounting rate-of-return method
B) net present value method
C) projected income method
D) payback method

Question

Quizplus · Accepted Answer

The net present value method uses discounted cash flows by discounting the expected cash inflows and outflows to present value using a predetermined rate of return. The accrual accounting rate-of-return method and projected income method use accounting metrics to calculate the expected return on investment. The payback method focuses on the time it takes to recover the initial investment and does not consider the time value of money or discounted cash flows.

Which of the Following Capital Budgeting Methods Uses Discounted Cash