Sophisticated capital budgeting techniques do not

Question

Quizplus · Accepted Answer

Sophisticated capital budgeting techniques do not use net profits as a measure of return because net profits do not take into account the time value of money or the risk associated with the investment. Instead, they use more comprehensive metrics such as net present value (which explicitly considers the time value of money), internal rate of return (which implicitly considers the time value of money), and discounted cash flow analysis (which takes into account an unconventional cash flow pattern).

Sophisticated Capital Budgeting Techniques Do Not