The two methods that use present values to analyse capital investment proposal consider the _____.

Question

Quizplus · Accepted Answer

The two methods referred to in the question are the net present value (NPV) method and the internal rate of return (IRR) method. Both of these methods use present values to analyze capital investment proposals, which means that they take into account the time value of money concept. This recognizes that money today is worth more than the same amount of money in the future because of its potential earning power. Therefore, the correct answer is A. The going concern concept, historical cost concept, and conservatism concept are all accounting concepts that are not directly related to capital investment proposals.

The Two Methods That Use Present Values to Analyse Capital