The net present value and internal rate of return methods of decision making in capital budgeting are superior to the payback method in that they

Question

Quizplus · Accepted Answer

The net present value and internal rate of return methods consider the time value of money, which means they take into account the fact that money today is worth more than the same amount of money in the future. This is a significant advantage over the payback method, which ignores the time value of money. The other options are not accurate as the net present value and internal rate of return methods are typically considered more complex and require more input, and sensitivity analysis can be conducted with all three methods.

The Net Present Value and Internal Rate of Return Methods